Hanjin in turbulence due to family feud over managing rights
From left, Cho Hyun-ah, Hanjin Group Chairman Cho Won-tae and Cho Hyun-min. Yonhap
Cho Won-tae may be designated as group's new head on FTC list
By Nam Hyun-woo
Hanjin Group is apparently struggling to stabilize its management after the late Chairman Cho Yang-ho's abrupt death, with signs of a feud being detected between Cho's three offspring over the group's management rights, industry officials said Thursday.
The group appears to be suffering setbacks in naming a leader who will be acknowledged by the antitrust authority.
According to the Fair Trade Commission (FTC), Hanjin Group failed to submit documents on time as required when changing the leader of the group. The antitrust authority pushed back the schedule for the announcement of large business groups' chairmen until May 15.
The Fair Trade Act states that “enterprise group means a group of companies the businesses of which is substantially controlled by the same person.” Depending on who this person is, the FTC recognizes which companies are affiliated with a group, thus determining which companies are subject to FTC regulations on conglomerates.
Hanjin Group had to change its leader and report it to the FTC following its chairman's death last month.
Initially, Cho's son Won-tae was expected to be named as leader, because the group named him as chairman on April 24.
However, the group failed to submit documents to the FTC within the designated period.
“Hanjin said it did not reach a consensus on who will be the next leader,” an FTC official said.
Hanjin reportedly submitted a letter under the name of Cho Won-tae on Wednesday afternoon, saying the group will designate him as its leader by May 15.
Despite the submission, the delay triggered anticipation that Cho Won-tae was announced as the group's new chairman without the consent of his sisters Hyun-ah and Hyun-min, amid suspicions they could oppose his chairmanship.
Industry officials said the suspected conflict stems from the three siblings' similar stakes in Hanjin KAL.
Hanjin KAL's largest stakeholder is the late chairman who has 17.84 percent. Won-tae has 2.34 percent, followed by Hyun-ah with 2.31 percent and Hyun-min with 2.3 percent.
If the late chairman's shares are divided according to the Civil Act, his spouse will get a 5.94 percent stake and the rest will be divided equally between their son and daughters, unless Cho's will states a different method.
This will give only 3.96 percent stakes to each of the three, meaning the new chairman's stake in the holding firm remains at around 6.3 percent, which is smaller than PEF KCGI's 14.98 percent stake in the holding firm. The PEF has been raising its stake in the holding firm for the past several months, challenging the Cho family's ownership.