The legal risks facing the former President of POSCO, Jang In-hwa, who has been nominated as the next chairman of the POSCO Group, are growing, sparking controversy.
According to industry sources, on Feb. 19, the People’s Livelihood Countermeasure Committee filed a complaint against former President Jang with the National Police Agency, accusing him of violating the Capital Markets Act, breach of fiduciary duty, and business obstruction, among other charges.
The Committee suspects that Candidate Jang, in collusion with Chairman Choi Jeong-woo and others, utilized undisclosed information to violate the Capital Markets Act before the resolution to acquire 1 trillion won worth of treasury shares in April 2020.
Furthermore, it is alleged that he committed breach of fiduciary duty by participating in a luxurious board meeting in China in 2019 and obstructed business by failing to implement memoranda of understanding (MOUs) signed with the Mayor of Pohang in April 2018 to improve the lives of local residents and in November 2017 via earthquake damage recovery.
Even before the Committee’s complaint, former President Jang was already under investigation for the same allegations. Prior to the Committee, the “POSCO Holdings Head Office & Future Technology Research Institute Pohang Relocation Citizens’ Countermeasure Committee” had filed a complaint with the police last month, accusing former President Jang and seven others of breach of fiduciary duty related to luxurious business trips.
The Countermeasure Committee claims that these individuals caused financial harm to the company by engaging in activities unrelated to board meetings in August 2019, including tourism to Mount Baekdu, charter flights from Shoudu Airport in Beijing to Yanji Airport, luxurious meals featuring pine mushrooms from Mount Baekdu and Russian king crab, luxury golfing at premium golf courses near Beijing, and consuming other high-end food and beverages at luxury hotels.
All independent directors on the POSCO Holdings CEO Nomination Committee, which evaluated the next chairman, are also under police investigation for these issues, including allegations of luxurious business trips to Canada last year.
Kang Chang-ho, chairman of the Countermeasure Committee, pointed out, “Since the POSCO Holdings CEO Nomination Committee is composed of criminal suspects, it has lost fairness and morality, thus rendering all their decisions invalid.”
The industry’s focus is now on the National Pension Service, POSCO Holdings’ largest shareholder with a 6.7% stake. The National Pension Service’s opinion is crucial as it must vote on the proposal to appoint former President Jang as chairman at the regular shareholders’ meeting on March 21.
Previously, the National Pension Service had raised issues with the fairness of the selection process for POSCO’s next chairman and the composition of the Nomination Committee, thereby halting the third term of Chairman Choi Jeong-woo.
Should the National Pension Service oppose the appointment of former President Jang, citing concerns over the fairness of the Nomination Committee’s composition and the investigation into luxurious business trips, all procedures could revert to the starting point.
An official from the Countermeasure Committee urged, “The National Pension Service must invalidate all decisions made by the criminally accused Nomination Committee and immediately and actively exercise legal authority in the appointment of the POSCO chairman.”