Cho Hyun-beom, chairman of Hankook Tire & Technology (hereinafter Hankook Tire), was arrested in the early hours of the 9th in connection with allegations of unfair support and embezzlement and breach of trust involving affiliates worth around 20 billion won.
The prosecution, having succeeded in securing Cho's custody, plans to accelerate the investigation into the related allegations. This is the first time a large conglomerate owner has been arrested under the Yoon Seok-yeol administration.
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 (warrant review). [Image source=Yonhap News]
At 12:48 a.m. that day, Yoon Jae-nam, the presiding judge in charge of warrants at the Seoul Central District Court, issued an arrest warrant for Cho, who is accused of breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, at the request of the prosecution. Judge Yoon explained the reason for issuing the warrant, stating, "There is concern about evidence destruction."
Cho appeared at the pre-arrest detention hearing (warrant substantive examination) held the previous afternoon under Judge Yoon's supervision but did not respond to reporters' questions such as 'How do you feel about attending?' or 'Do you admit the charges?' and entered the courtroom silently.
On the 6th, the Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Lee Jeong-seop) requested a pre-arrest warrant for Cho on charges including embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes and violation of the Fair Trade Act.
At that time, a prosecution official explained the background for seeking Cho's custody, saying, "Due to the strong pursuit of private interests, the nature of the crime is serious, and there are signs of evidence destruction." This was the first case of the prosecution requesting an arrest warrant for a large conglomerate owner since the launch of the Yoon Seok-yeol administration.
Cho, the grandson of the late Cho Hong-je, founder of the Hyosung family, 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 is accused of causing damage to the company by lending about 13 billion won of affiliate Hankook Precision Works (MKT) funds to Rihan, a Hyundai Motor Company partner, despite knowing that the management situation of the company was poor in 2020-2021, using his personal friendship with CEO Park Ji-hoon of that company (breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes).
He is also accused of embezzling tens of millions of won of company money around the same period for personal home repairs and purchasing foreign cars (embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes).
The amount of embezzlement and breach of trust by Cho identified by the prosecution is known to reach around 20 billion won.
Cho is also accused of 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 Cho and other family members.
MKT is a company in which Hankook Tire holds 50.1%, Cho holds 29.9%, and his older brother Cho Hyun-sik, an advisor at Hankook & Company, holds 20.0% of the shares. From 2016 to 2017, dividends totaling 10.8 billion won were paid, including 6.5 billion won to Cho and 4.3 billion won to the advisor Cho.
In December last year, the prosecution summoned Cho as a witness and requested the Fair Trade Commission to file charges against him. Subsequently, the prosecution conducted multiple searches of Hankook Tire headquarters, affiliates, and the residences of 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 of affiliates.
This is Cho's second arrest. In 2019, a pre-arrest warrant was issued against him on charges of receiving several million won monthly, totaling over 600 million won, from subcontractors as delivery fees and regularly embezzling about 200 million won of affiliate funds separately. He was indicted and released on bail in March 2020 while the first trial was ongoing. In November of the same year, the appellate court confirmed a sentence of three years in prison with a four-year probation. A confiscation order of 61.5 million won was also imposed.
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