'Embezzlement and Breach of Trust' Korea Tire's Cho Hyun-beom Appears for Detention Hearing

On the 8th, Cho Hyun-bum, chairman of Hankook Tire & Technology (hereinafter Hankook Tire), stood for detention hearing in connection with allegations of unfair support and embezzlement/breach of trust involving subsidiaries worth around 20 billion won. Chairman Cho, the grandson of the late Cho Hong-je, founder of the Hyosung Group, is the second son of former Hankook Tire chairman Cho Yang-rae. He is also the son-in-law of former President Lee Myung-bak.

Cho Hyun-beom, chairman of Hankook Tire & Technology, who is suspected of unfair support to affiliates and embezzlement and breach of trust, is appearing at the Seoul Central District Court in Seocho-gu, Seoul, on the afternoon of the 8th to undergo a pre-arrest detention hearing.
[Photo by Yonhap News]

At 3:30 p.m. that day, Yoon Jae-nam, the presiding judge in charge of warrants at the Seoul Central District Court, conducted the pre-trial detention hearing for Chairman Cho.

He entered the courtroom without responding to reporters’ questions such as "How do you feel about attending?" and "Do you admit the charges?" The decision on whether to detain him is expected to be made late that night or early the next morning.

On the 6th, the Fair Trade Division of the Seoul Central District Prosecutors’ Office (Chief Prosecutor Lee Jeong-seop) requested a pre-trial detention warrant for Chairman Cho on charges including embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, and violations of the Fair Trade Act.

At the time, a prosecution official explained the background for seeking detention, saying, "Due to the strong pursuit of private interests, the nature of the crime is serious, and there are signs of evidence destruction." This is the first time since the launch of the Yoon Seok-youl administration that a detention warrant has been requested for a large conglomerate owner.

Chairman Cho is accused of causing damage to the company by lending about 13 billion won of subsidiary Hankook Precision Works (MKT) funds to Park Ji-hoon, CEO of Hyundai Motor’s partner company Rihan, despite knowing that Rihan’s management situation was poor in 2020-2021, based on personal friendship (breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes).

He is also accused of embezzling tens of billions of won of company money during a similar period for personal home repairs and purchasing foreign luxury cars (embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes).

The amount of embezzlement and breach of trust by Chairman Cho identified by the prosecution is known to reach around 20 billion won.

Chairman Cho is also charged with unfairly supporting MKT by having Hankook Tire purchase tire molds from MKT at prices higher than other manufacturers from 2014 to 2017 (violation of the Fair Trade Act). The prosecution believes that the profits funneled to MKT by Hankook Tire flowed into the hands of Chairman Cho and his family.

MKT is a company in which Hankook Tire holds 50.1%, Chairman Cho holds 29.9%, and his older brother Cho Hyun-sik, advisor of Hankook & Company, holds 20.0% of the shares. From 2016 to 2017, MKT paid dividends totaling 10.8 billion won, including 6.5 billion won to Chairman Cho and 4.3 billion won to Advisor Cho.

In December last year, the prosecution summoned Chairman Cho as a witness for investigation and requested the Fair Trade Commission to file charges against him. Subsequently, the prosecution conducted multiple searches of Hankook Tire headquarters, subsidiaries, and the residences of Chairman Cho and other related parties. Earlier this year, the prosecution indicted purchasing executive Jeong Mo and the company corporation without detention on charges of unfair support to subsidiaries.