Police raid Korean Air headquarters

Korean Air’s headquarters in western Seoul (above) was raided by police Friday over allegations that Hanjin Group Chairman Cho Yang-ho used company funds to pay for the remodeling costs of his private home. / Yonhap

By Kim Bo-eun

Police raided Korean Air’s headquarters in western Seoul, Friday, over allegations of its chairman’s dereliction of duty and embezzlement.

Thirteen investigators searched the office and confiscated evidence including accounting documents and contracts.

Hanjin Group Chairman Cho Yang-ho is suspected of having used part of company funds meant to build a hotel on Yeongjongdo, Incheon, to pay for interior work in his home in Pyeongchang-dong in Seoul, from May 2013 to August 2014.

The Grand Hyatt Incheon is owned by KAL Network, a subsidiary of Hanjin KAL, the Hanjin group holding company. Hyatt runs the hotel.

Police believe both projects were being worked on at the same time.

The firm responsible for the interior of Cho’s home has been under investigation for alleged tax evasion. It had also been in charge of interior work on the homes of other conglomerate chiefs including Samsung Group’s Lee Kun-hee.

In May, police raided the firm after suspicions arose that Samsung affiliate C&T paid for the interior construction costs of Lee’s home. Investigations are ongoing.

After analyzing the confiscated data, police plan to summon officials of the firm involved in processing construction expenses. The amount of embezzled funds is estimated to exceed 1 billion won ($866,325), but police did not provide an exact figure.

“We are conducting an investigation based on allegations that (Cho) used hotel construction funds to pay the construction fees of his private home, which he should have paid,” police said.

Korean Air said, “We will cooperate with the investigation and are in the process of conducting internal fact checking.”

Work on the Grand Hyatt Incheon began in January 2012 and was completed in 30 months.

With 522 rooms in its east tower and 500 in its west, it is among the largest Hyatt hotels outside the U.S.