Korean Air family under siege despite father's apology

The two daughters of Korean Air chairman Cho Yang Ho have resigned after the younger daughter was accused of abusing an employee, four years after her older sister’s infamous 'nut rage' incident.
South Korean customs investigators leaving the residence of Korean Air heiress Cho Hyun Min in Seoul on April 21, 2018.
South Korean customs investigators leaving the residence of Korean Air heiress Cho Hyun Min in Seoul on April 21, 2018.PHOTO: EPA-EFE

SEOUL (THE KOREA HERALD/ASIA NEWS NETWORK) - The controlling family of South Korea's largest air carrier found itself under heavy criticism on Monday (April 23) amid the emergence of fresh allegations of misconduct and another search and seizure operation - this time at its headquarters - despite a public apology made by the father of the two troubled heiresses a day earlier.

South Korean customs investigators again raided the head and branch offices of Korean Air in Seoul where the air carrier's senior vice-president Cho Hyun Min has offices, to secure evidence of customs evasion.

Cho Hyun Min, also known as Emily Cho, is the youngest daughter of Korean Air Chairman Cho Yang Ho.

She has been at the centre of controversy after she was accused of throwing water at an advertising agency official during a meeting, sparking a flurry of accusations that the family members had abused their authority over staff.

The customs service agency was raiding Korean Air offices for the second time in days. Last Saturday (April 21), the agency confiscated evidence from residences of the ownership family members and tracked down their credit card transaction records.

Monday's raid appears to have focused on suspicions the family regularly smuggled luxury items by disguising them as airplane parts and office supplies.

The alleged evasions of customs checks had been carried out by Korean Air staff acting under the family's orders over many years, according to anonymous sources inside the company.

 
 
 

Police also plan to summon Cho Hyun Min within the week to question her under suspicion of assault, and open a preliminary probe into her mother, Lee Myung Hee, over allegations she assaulted and verbally abused workers when renovating her house in 2013.

Lee allegedly told the workers to kneel down and slapped them in the face and kicked them in the shins.

She is also suspected of verbally insulting an employee at a Incheon-based hotel affiliated with Hanjin Group, Korean Air's parent company, and later having the worker quit for not recognising her.

As the whistleblowing and "expose" reports continue to pour out from anonymous sources and news outlets, one media outlet has reported suspicions of the airline using a liquid containing cancer-causing agents to remove stains on passenger seats and carpets.

Amid escalating controversy, the airline said it has named a former Constitutional Court judge to chair its planned compliance committee.

In his letter of apology on Sunday (April 22), Chairman Cho pledged to strengthen the role of the boardroom and launch a compliance committee to "institutionally prevent" such incidents from happening, while firing his two daughters.

Along with Cho Hyun Min, elder sister Cho Hyun Ah, president of KAL Hotel Network, an affiliate of the carrier, was forced to step down.

In 2014, Cho Hyun Ah, also known as Heather Cho, was jailed for five months for ordering a Korean Air plane to return to its gate at a New York airport after she was angered over the way a packet of macadamia nuts was served to her in first class.

The share price of Korean Air, despite gaining 2.7 per cent Monday afternoon, has lost about 5 per cent since April 12, when the "water rage" scandal first flared up.

Some analysts said that Korean Air's ownership risk will have a limited impact to the air carrier's stock price, as the company has enjoyed a boom in the cargo industry and growing demand for outbound travel.

The company also plans to expand its Asia-Pacific routes in a joint venture with Delta Airlines by the end of this year.

Bruce Lee, founder and chairman of Zebra Investment in Seoul, however, urged major stakeholders like the National Pension Service to speak up to keep Chairman Cho and his family in check.

"Korean Air may suffer a limited impact because of its monopolistic presence" in the local aviation market, he said.

"The incident represents a typical problem within chaebol (conglomerate) governance structures. If the family is found guilty of violating the regulations, major shareholders like NPS should step up and strengthen monitoring of their management," he said.

The NPS holds 12.6 per cent while foreign investors hold 17 per cent stake in Korean Air, which is valued at 3.1 trillion won (S$3.8 billion).