[Courtesy of Korean Air]
Korean Air, the country's largest national flag carrier, vowed to sell its idle land estimated at 500 billion won ($424 million) and a building in central Seoul as well as Wangsan Leisure Development, a leisure company that operates a marina resort in the western port city of Incheon, within this year.
In a related move on Thursday, Korean Air's board agreed to establish a governance committee of outside directors that will review and make recommendations about key management decisions. The move coincided with a statement from Korea Corporate Governance Improvement (KCGI), an activist private equity fund, which accused Cho Won-tae of turning a deaf ear to calls from ordinary shareholders without realizing Hanjin's management crisis.
The chairman "is not fully aware of Hanjin's management crisis and cannot even present a clear breakthrough," KCGI, which is the biggest single shareholder of Hanjin KAL, the holding company of Hanjin Group, said, adding Korean Air's debt ratio stood at 922.5 percent at the end of the third quarter of last year.
Korean Air "belatedly" came up with a new plan to improve management, KCGI said in sarcastic comments. "It is difficult to give sincerity or credibility to plans presented by the management which maintains the view of treating shareholders as 'external forces,' not as the company's true owners."
In a surprise move on January 31, the fund partnered with Cho Hyun-ah, a former Korean Air vice president known for a "nut rage" incident in 2014, and Bando Engineering & Construction, which together hold more than 30 percent of shares in Hanjin-KAL, to vote together against Cho Won-tae at a meeting of shareholders in March.
Cho Hyun-ah, 45, and her partners revealed their clear intention to expel the 44-year-old chairman, who officially took the helm in May last year to succeed his late father, saying the group should be run by professional managers to enhance the interests of ordinary shareholders.
The ill-matched alliance is powerful enough to sway the leadership of Cho Won-tae. However, it also sparked criticism that KCGI was "sleeping with the enemy" because Cho Hyun-ah was once the subject of widespread public criticism.
As an excuse, KCGI defended the three-way alliance as "the first step to achieve improvement in governance by changing the existing management system that operates Hanjin Group as a private entity without vision or capability to a new professional management system."
KCGI has a 17.3 percent stake in Hanjin KAL, followed by Delta Air Lines with 10 percent. Bando holds 8.28 percent and the National Pension Service (NPS), a state pension fund, owns 4.11 percent. Delta has been among the chairman's friendly shareholders.
Hanjin was battered by a series of scandals throughout last year after Cho Hyun-min threw a glass cup and sprayed plum juice during a business meeting with advertising agency officials. The incident fueled public anger, leading to multiple investigations into the late chairman, his wife and children on charges of creating a slush fund, evading taxes, bringing in luxury foreign goods illegally, abusing and assaulting company employees and others.
Cho Hyun-ah became enraged in December 2014 when a flight attendant served her some nuts in a bag on board a flight that was forced back to the gate while taxiing to the runway. She was given a prison sentence on conviction of violating aviation safety laws, but an appeals court suspended her sentence in May 2015.
Cho Hyun-min has come back to Hanjin's leadership, while Cho Hyun-ah has been sidelined.
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