Cho Hyun-beom, chairman of Hankook Tire & Technology (Hankook Tire), who is accused of unfair support to affiliates and embezzlement and breach of trust, denied most of the charges at his first trial.
On the morning of the 21st, the Criminal Division 23 of the Seoul Central District Court (Presiding Judge Jo Byung-gu) held the first preparatory hearing for Cho, who was indicted and detained on charges of violation of the Act on the Aggravated Punishment of Specific Economic Crimes (embezzlement and breach of trust) and the Fair Trade Act. The preparatory hearing is a procedure to hear opinions from both the prosecution and defense and to establish a plan for future evidence presentation. Although the defendant is not required to attend, Cho appeared in court in person that day.
Cho’s defense attorney stated that they deny the charges of embezzlement and breach of trust involving company funds and the private lending of affiliate funds. Regarding the charges of private use of corporate vehicles and corporate cards, they said they would review further and provide detailed opinions later.
Previously, Cho was prosecuted on charges of being involved in unfairly supporting Hankook Tire by purchasing tire molds worth approximately 87.5 billion KRW from its affiliate Hankook Precision Works (MKT) between February 2014 and December 2017, paying higher prices than other manufacturers. The damage to Hankook Tire was estimated to be about 13.1 billion KRW.
The prosecution judged that the profits funneled to MKT by Hankook Tire flowed into the hands of Cho and his family. MKT is a company in which Hankook Tire holds 50.1%, Cho holds 29.9%, and his brother Cho Hyun-sik, an advisor at Hankook & Company, holds 20% of the shares.
The prosecution believes that Cho, who served as an executive at Hankook Tire from November 2011 to December 2017, secured a personal 29.9% stake during the acquisition of MKT and subsequently received profits by setting significantly high prices for MKT.
He is also charged with embezzling and breaching trust of about 7.55 billion KRW of company funds from 2017 to 2022. Despite knowing that Lihan, a Hyundai Motor Company partner, was in poor financial condition, he allegedly lent 5 billion KRW of MKT funds without collateral, leveraging his personal friendship with CEO Park Ji-hoon of that company.
He also embezzled funds by including 260 million KRW for furniture purchased for his private residence in the furniture costs needed for the construction of Hankook Tire’s new headquarters, and by including 12 million KRW of moving expenses for his private residence in the repatriation costs of overseas dispatched employees.
Additionally, it was investigated that he used corporate cards for family overseas trips and gave four corporate cards to acquaintances who owed him personal debts to use. He purchased or leased five luxury foreign cars under the names of Hankook Tire and its affiliates for private use and assigned corporate drivers as exclusive chauffeurs for his spouse.
The prosecution stated that Cho incurred debts exceeding 361 billion KRW during the succession process of management rights, and as annual repayments of loan principal and interest and installment payments of gift tax exceeded 40 billion KRW, he began to misuse company funds.
During the investigation, the prosecution also confirmed multiple attempts to destroy evidence, including falsifying and submitting false vehicle operation records, hiding corporate vehicles immediately after a search and seizure, and coercing key persons.
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. This is the first time a large conglomerate owner has been detained under the Yoon Suk-yeol administration.
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