Chairman Cho Yang-rae Supported His Second Son... Jo Hyun-beom's 'Second Trial' Still a Variable

[Asia Economy Reporter Kiho Sung] Cho Yang-rae, chairman of Korea Technology Group (formerly Korea Tire Worldwide), has officially confirmed the succession of management rights to his second son, Cho Hyun-beom, president of Hankook Tire & Technology, amid a dispute over management rights among his children, drawing attention as the controversy shows no signs of subsiding. However, since Cho is still facing trial and depending on the stance taken by his other siblings, there is concern that conflicts may flare up again.

In a statement released by the company on the 31st, Chairman Cho said, "I have entrusted Cho Hyun-beom with practical management for about 15 years, during which he has achieved good results and made significant contributions to the company's growth. I believe he has undergone sufficient verification and have already designated him as the largest shareholder." He emphasized, "To prevent further confusion over the recent movements within the family regarding the largest shareholder status, I sold all my shares to President Cho Hyun-beom as I had previously planned. I want to reiterate that this was not a sudden decision."

Chairman Cho has been regarded as a representative reclusive type of manager in the business community. At the beginning of the statement he released this time, he said, "This is the first time in over 60 years of doing business that I have appeared before the public like this, so it is very unfamiliar and even awkward." However, unlike his usual behavior, he officially expressed his position due to the recent dispute over management rights among his children.

Earlier, Chairman Cho sold all of his 23.59% stake in Korea Technology Group to his second son, Cho, through a block deal (large-scale trading outside regular hours). Combining his existing shares with his father's shares, Cho now holds 42.9%, becoming the largest shareholder.

In response, Cho Hee-kyung, the eldest daughter of Chairman Cho and director of the Hankook Tire Sharing Foundation, filed a petition for the commencement of adult guardianship at the Seoul Family Court on the 30th of last month. In a statement, she said, "We filed the petition to objectively determine whether Chairman Cho is capable of voluntary decision-making in a healthy state," and added, "Through an objective judgment, we want to protect the chairman's usual beliefs and prevent potential problems for the family or the company."

The adult guardianship system is a system that appoints a guardian for adults who continuously lack the ability to handle affairs due to mental limitations such as illness, disability, or old age. The ward can receive protection and support from the guardian for property management and matters difficult to decide on their own in daily life.

As a result, with Chairman Cho clearly stating his position, the atmosphere is leaning toward Cho Hyun-beom succeeding the management rights with his father's backing. However, variables remain. Cho is currently on trial for charges including receiving bribes from subcontractors. In the first trial, he was sentenced to three years in prison with a four-year probation and fined 615 million won, and he is currently undergoing the second trial after appealing.

According to the revision of the Enforcement Decree of the Act on the Aggravated Punishment of Specific Economic Crimes, executives who have committed embezzlement or breach of trust exceeding 500 million won are prohibited from returning to the company. Even if the sentence is lower, if legal detention occurs, management activities are significantly restricted. Cho is focusing on the second trial after resigning as CEO of Hankook Tire & Technology.

It is also of interest how the other siblings will react. Cho Hyun-sik, the eldest son of Chairman Cho, did not clearly state his position regarding the application for adult guardianship supervision by Director Cho, saying, "As a family member and a major shareholder of the group, I am considering it."

Although Cho holds 42.9% as the largest shareholder, the combined shares of Cho Hyun-sik, holding 19.32%, Cho Hee-won, the chairman's second daughter, holding 10.82%, and the National Pension Service's 7.74% amount to 37.88%. Including minority shareholders, there is still a possibility of securing more than half of the shares. Additionally, the position of the National Pension Service, which may play a casting vote depending on Cho's trial sentence, is expected to be clarified.

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