Hanjin Group Refutes Triple Alliance Claims Point by Point in 'Fact Check' Format

[Image source=Yonhap News]

[Asia Economy Reporter Kim Hyewon] One week before the Hanjin Kal shareholders' meeting, Hanjin Group has taken a fact-checking approach to systematically refute the claims made by the 'three-party shareholder alliance' consisting of former Korean Air Vice President Cho Hyun-ah, activist private equity fund (PEF) KCGI, and Bando Construction.

On the 20th, Hanjin Group released a statement titled "Are the claims of the Cho Hyun-ah shareholder alliance plausible?... Here are the facts," arguing, "It is questionable whether Bando Construction, a representative of closed family-run management, KCGI, which received investment from Chosun Refractories that was rated the lowest in corporate governance, and former Vice President Cho Hyun-ah, who damaged Hanjin Group's image including the nut rage incident, are qualified to discuss transparent management and enhancing shareholder value." This was in response to the three-party alliance's declaration that they aim to improve Hanjin Group's corporate governance and transparent management.

Hanjin Group criticized, "Chairman Kwon Hong-sa of Bando Construction and his son Executive Director Kwon Jae-hyun own 99.67% of the shares of the holding company Bando Holdings, which owns each affiliate. In particular, profitable affiliates are under a typical family-centered management system, with 100% ownership by the wife, son, son-in-law, and second daughter." They added, "Chairman Kwon Hong-sa exploited a differential dividend system intended for minority shareholders to pay Executive Director Kwon Jae-hyun 63.9 billion KRW in dividends over three years, which is essentially an illegal gift disguised as dividends."

Regarding Chosun Refractories, in which KCGI invested, Hanjin Group pointed out, "The owner family spanning four generations is listed on the shareholder registry, board independence is not guaranteed, and there are no compensation committees or outside director nomination committees. The structure includes unrelated companies such as golf courses, media companies, and automotive parts manufacturers, which is incompatible with transparent management and corporate governance improvement."

Hanjin Group also rebutted KCGI CEO Kang Sung-bu's statement at a press conference on the 20th of last month, where he emphasized that "the final maturity of KCGI's main funds is 14 years," claiming they are long-term investors, not 'hit-and-run' investors. Hanjin Group stated, "Among KCGI's nine private equity funds, only 'KCGI No.1 Private Equity Investment Partnership (No.1 PEF)' and 'KCGI No.1-5 Private Equity Investment Partnership (No.1-5 PEF)' have a duration of 10 years, while the other seven PEFs have a duration of only three years. The No.1 PEF has no extension provisions, and the No.1-5 PEF has been registered for two extensions of two years each, but these require unanimous consent from all investors, making extensions practically impossible." They added, "The seven KCGI PEFs with only three-year durations mean investors can demand liquidation after three years, which contradicts KCGI's claims and indicates that the funds were raised for short-term 'hit-and-run' investment purposes."

Regarding the three-party alliance's recent disclosure of a shareholder agreement stating they will not intervene in management, Hanjin Group commented, "After taking control of the board and appointing a CEO, the CEO can appoint parties related directly or indirectly to the three-party alliance as non-registered executives, which constitutes management participation and return to management. This is an act of deceiving the market and shareholders."

In response, the three-party alliance issued a press release on the same day, reiterating, "Rather than retaining the current management, including Chairman Cho Won-tae, who has serious disqualifications due to the management crisis, it is necessary to appoint a new board of directors that will manage Hanjin Kal transparently with independence, professionalism, and responsibility to overcome the crisis."

The alliance further pointed out, "Among the National Pension Service's fiduciary responsibility expert committee members, Heo Hee-young is a professor in the Department of Business Administration at Korea Aerospace University, affiliated with the Jungseok Inha Foundation where Cho Won-tae is a registered director. There are concerns about conflicts of interest as Heo has publicly supported Cho Won-tae's side through media interviews."

This content was produced with the assistance of AI translation services.