Chairman Heo Young-in's Detention 'At a Crossroads'... SPC Faces Concerns Over Management Vacuum Realization

Heo Young-in (74), chairman of SPC Group, who is accused of coercing Paris Baguette bakers to withdraw from the Korean Confederation of Trade Unions, is at a crossroads regarding detention. If Chairman Heo is detained following SPC CEO Hwang Jae-bok, SPC Group is expected to face a management vacuum with the entire top leadership absent. Due to the judicial risks surrounding Chairman Heo, decision-making on major management issues may be delayed, and overseas business initiatives that the group had been focusing on, such as Paris Baguette's entry into Italy, are inevitably expected to face setbacks.

According to the legal community and related industries on the 4th, the Public Investigation Division 3 of the Seoul Central District Prosecutors' Office (led by Chief Prosecutor Im Sam-bin) filed a post-arrest detention warrant request for Chairman Heo on the previous afternoon on charges of unfair labor practices (violation of the Labor Union and Labor Relations Adjustment Act). At 3 p.m. that day, a pre-detention suspect hearing (warrant examination) will be held at the Seoul Central District Court under the presiding judge Nam Cheon-gyu, who is in charge of warrants, after which the decision on detention will be made. Earlier, the prosecution arrested Chairman Heo around 8 a.m. on the 2nd while he was hospitalized in a hospital in Seoul. When a suspect is arrested, a detention warrant must be requested or the suspect released within 48 hours.

Chairman Heo Young-in of SPC Group [Photo by Yonhap News]

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SPC Group is already without a CEO. Earlier, President Hwang was detained in early last month on suspicion of coercing Paris Baguette bakers to leave the union, and Kang Sun-hee, a former judge and co-CEO, resigned on the 2nd of last month. Former co-CEO Kang left the company after one year in office to assist her husband, Kim Jin-mo, a preliminary candidate for the People Power Party in Cheongju Seowon-gu, Chungbuk, in the April 10 general election campaign.

Currently, the deputy executives of the business division are sharing the workload to fill the management gap of the group. If Chairman Heo is also detained, the group may lose the driving force to lead major pending issues. Chairman Heo, who repeatedly refused prosecution investigations, met Mario Pascucci, the CEO and third-generation founder of the Italian coffee brand Pascucci, in Korea on the 24th of last month, just before his arrest, to discuss Paris Baguette's entry into Italy.

Considering the sluggish domestic market due to economic contraction in China, SPC is seeking a breakthrough through Paris Baguette's expansion into Europe. The group is also focusing efforts on targeting the halal markets in Islamic countries such as Saudi Arabia and Malaysia. Earlier this year, the family head of the group was acquitted of embezzlement charges, and the group partially won lawsuits related to fines imposed by the Fair Trade Commission on five affiliates including SPC Samlip, showing signs of resolving judicial risks, but now faces another crisis due to labor risks.

SPC unusually issued statements for two consecutive days at the group level, expressing strong regret toward the prosecution, stating, "We believe that the charges against Chairman Heo are not clear enough to justify the forced execution of an arrest warrant on an elderly patient currently hospitalized, without providing sufficient opportunity for the suspect to testify and defend himself, yet still requesting a detention warrant." They added, "It is very regrettable that similar situations are repeating at a critical time for SPC Group's global business expansion," and "We hoped the prosecution would review Chairman Heo's position more carefully, but the current situation is very disappointing."

Chairman Heo's side is expected to focus on demonstrating the lack of evidence for criminal charges and the absence of flight risk during the warrant hearing. Legal circles believe that the seriousness of the crime will determine whether the detention warrant for Chairman Heo is granted. Attorney Jang Jun-sung of Law Firm How said, "One of the factors in assessing flight risk for detention warrants is the seriousness of the crime," adding, "In white-collar crimes, if there is a possibility of a heavy sentence, it is considered that there is a flight risk."

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