Prosecutors Indict Former Kumho Chairman Park Sam-gu on Charges of Unfair Support to Affiliates

Former Chairman Park Sam-gu of Kumho Asiana Group Photo by Yonhap News

[Asia Economy Reporter Kim Daehyun] Former Kumho Asiana Group Chairman Park Sam-gu, suspected of 'unfair support to affiliates,' has been indicted.

On the 26th, the Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office (Chief Prosecutor Kim Min-hyung) indicted former Chairman Park on charges of violating the Monopoly Regulation and Fair Trade Act (Fair Trade Act) and the Act on the Aggravated Punishment of Specific Economic Crimes (Specific Economic Crimes Act), among others.

Additionally, Yoon Mo, former Kumho Asiana Group Executive Director, who was previously indicted in January on charges of evidence destruction, was further indicted on embezzlement and breach of trust charges under the Specific Economic Crimes Act. Park Mo, Head of Strategic Management Office, and Kim Mo, Executive Director in charge of Planning and Finance at the Strategic Management Office, were indicted without detention.

Former Chairman Park and former Executive Director Yoon are accused of embezzling 330 billion KRW from four Kumho affiliates, including Kumho Terminal, to pay for stock acquisition aimed at expanding the management rights of Kumho Industrial, the parent company of Asiana Airlines, in 2015 (embezzlement under the Specific Economic Crimes Act).

They are also accused of breach of trust under the Specific Economic Crimes Act for selling 100% of Kumho Terminal shares held by Asiana Airlines to Kumho Enterprise at a low price in 2016. Kumho Enterprise was merged into Kumho Terminal that same year, and soon after, Kumho Terminal changed its name to Kumho Holdings. In 2017, Kumho Holdings absorbed the former Kumho Express, and from the following year to the present, the name Kumho Express has been used.

Former Chairman Park is also charged with violating the Fair Trade Act by supporting nine affiliates, including Asiana Airlines, to lend about 130 billion KRW without collateral and at low interest to the former Kumho Express, which had a high ownership stake by the group head. He is further accused of violating the Fair Trade Act and breach of trust under the Specific Economic Crimes Act by transferring the exclusive in-flight meal business rights of Asiana Airlines to a Gate Group affiliate at a low price in exchange for investing 160 billion KRW in convertible bonds (BW) of the former Kumho Express that year.

Last year, the Fair Trade Commission uncovered these allegations and imposed corrective orders along with a fine of 32 billion KRW on the Kumho side. On the 13th, the court issued a warrant citing evidence destruction, and former Chairman Park is currently in custody.

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