Airline defends Cho power play

Korean Air insists that the recent transfer of its employees to Hanjin KAL, which owns 30 percent of the carrier, is all above board and a simple human resources decision.

The Korea Corporate Governance Improvement (KCGI), a major shareholder in Hanjin KAL, claims that the maneuver is a power play by Cho Won-tae, chairman and CEO of Korean Air, chairman of Hanjin KAL, chairman of Hanjin Group and a Hanjin KAL shareholder. It believes that the move is a violation of the law.

No specific details have been made available about the number of employees moved or their positions, but Korean Air says it generally transfers 20 employees every year.

In a statement Tuesday, Korean Air vigorously defended the transfers, saying in the statement that the process is “legitimate.”

It added that the costs of the moves are being calculated in a fair manner and that the employee transfers are being undertaken for training purposes so that the workers better understand other businesses within the group.

KCGI described the transfers as “illegal support in terms of the fair trade law.” It further described Cho’s act as putting himself above the overall development of Hanjin Group, and called it “beyond deplorable.”

The fund, which owns 17.29 percent of Hanjin KAL, said the decision was made to help Cho Won-tae maintain his CEO position at the Korean Air general shareholder meeting in March, where Cho’s reappointment will be put on the agenda.

“CEO Cho Won-tae’s inappropriate act of treating Korean Air employees like his maids should be stopped,” KCGI said in a statement. “Korean Air employees are made to take responsibility for the sluggish performance resulting from reckless management and excessive debt ratio.”

Members of the Cho family own a total of 24.79 percent of Hanjin KAL, with Cho Won-tae holding 6.52 percent and Cho Hyun-ah, his sister, owning 6.49 percent.

Reportedly, KCGI’s accusation arrived after the fund had a meeting with Cho Hyun-ah and an executive from Bando Engineering & Construction, which owns 8.28 percent of Hanjin KAL.

Delta Air Lines has a 10 percent stake in the company.

Cho Hyun-ah, a former Korean Air vice president, last month claimed through a legal representative that her brother is managing the group against their father’s will.

She currently doesn’t hold any positions in the group and believes that she should.

She told the JoongAng Ilbo she is “willing to talk to any shareholder, including KCGI” if it’s in her interests.

Kakao on Monday announced it purchased a 1 percent stake of Hanjin KAL. It is estimated to have bought the shares for around 20 billion won ($18 million) in December when it signed a memorandum of understanding with Korean Air to work on digitalization of the airline and in-flight entertainment.

BY JIN MIN-JI [jin.minji@joongang.co.kr]