South Korean customs officials raid Korean Air headquarters as 'water rage' scandal escalates into customs probe

Officials of the Korea Customs Service exit the residence of Cho Hyun Min, senior vice-president of Korean Air, in Seoul, on April 21, 2018. PHOTO: EPA-EFE
Officials of the Korea Customs Service exit the residence of Cho Hyun Min on April 28, 2018, after searching for evidence over allegations that Cho and her family didn't pay duties on luxury goods brought into the country through the company's flights. PHOTO: EPA-EFE

SEOUL (THE KOREA HERALD/ASIA NEWS NETWORK) - South Korean customs officials raided the headquarters of Korean Air Lines Co. and the residence of its parent company Hanjin Group Chairman Cho Yang Ho's daughter on Saturday (April 21), to aid investigations into allegations that the heiress did not pay duties on luxury goods brought into the country.

Investigators from the Korea Customs Service stormed into the main office of the country's biggest airline in western Seoul and the house of Korean Air's senior vice president Cho Hyun Min, Yonhap news agency reported.

The "water rage" scandal of Cho Hyun Min, youngest daughter of Cho Yang Ho, has escalated into an extensive customs evasion investigation involving the entire family, following claims that the high-profile members often abused the group's signature company Korean Air to "smuggle" personal goods.

Calls also mounted on the need to reinforce the customs examination process for flight attendants and airport employees, who go through a simpler process at departure and arrival terminals.

The Korea Customs Service said on Friday (April 20) that it was looking into the credit card details of group chief Cho, his wife Lee Myung Hee, and their three children - KAL Hotel Network President Cho Hyun Ah, Korean Air President Cho Won Tae, and Korean Air Senior Vice President Cho Hyun Min.

"In case there is a considerable amount of discrepancy between the spending details and the customs payment records and the (Cho family members) fail to clarify the reasons, it may be possible to summon them for face-to-face questioning," said an official of the customs office.

Circumstantial evidence will be necessary in addition to the numerical inconsistency, the official added, as a simple discordance in amount may not necessarily constitute a breach of customs regulations.

The Customs Act states that purchased goods worth US$600 (S$790) or more are subject to customs declaration. Violators may face a maximum jail sentence of 10 years or a fine of 20 million won ($24,625) and have the corresponding goods confiscated.

The probe came in the wake of a series of whistleblowers' claims that the Cho family frequently smuggled luxurious goods through employee-only passageways, abusing their position as owner of the nation's largest air carrier.

"We have been trying to get in direct touch with the corresponding employee (who made the claim), but the person is refraining from going public in fear of career disadvantages," the official said.

The accusations, though made anonymously via social network service channels, all pointed to the customs clearance-free employees' passageways as the key smuggling route.

"Airports are not required to deploy a customs officer at these employees-exclusive hallways, which are just wide enough for a single individual to pass through," the customs office explained.

But small luxurious items such as purses and jewelry may easily be brought in as personal belongings, especially with the help of the air carrier ground crew, the official added.

Recently triggering the power abuse scandal of the Cho family was youngest daughter Hyun Min's reported assault - screaming insulting words and throwing water during a meeting - against an agency official in a fit of rage.

Cho's elder sister Hyun Ah made headlines last month upon returning to a top position within the group, despite her disgrace and jail sentence for the so-called "nut rage" incident in 2014, in which she ordered a Korean Air plane back to its departure gate amid her fury over the way her in-flight snack was served.

Meanwhile, the total market capitalisation by Hanjin Group's five listed companies - Korean Air, Hanjin KAL, Jin Air, Hanjin, and Korea Airport Service - stood at 5.8 trillion won as of Thursday's closing, down 5.4 percentage points from last Wednesday, the day before the water rage incident was first reported.

Join ST's Telegram channel and get the latest breaking news delivered to you.