Korea Corporate Governance Service (KCGS) is siding with Hanjin Group chairman Cho Won-tae with Hanjin KAL’s shareholder meeting scheduled for March 27.
KCGS said in its report on March 16 that former Korean Air vice president Cho Hyun-ah is the very person who triggered the group’s governance-related problems, Bando Construction is focusing on business opportunities based on the group’s land, and their business philosophy needs to be doubted.
According to KCGS, the purpose of Bando Construction’s Hanjin KAL share acquisition is doubtful. The construction company’s subsidiary Daeho Development acquired more than 5 percent of Hanjin KAL shares in October last year, mentioning investment as the purpose of the acquisition. Then, the subsidiary acquired more shares and changed its purpose to participation in management on Jan. 10.
“If directors recommended by the former vice president and the construction company constitute the majority of the board of directors of Hanjin KAL, Korea Corporate Governance Improvement’s intention not to directly participate in management will be diluted,” KCGS explained, raising an objection to their candidates. It also pointed out that their CEO candidates are short of expertise.
“Meanwhile, the board of directors of Hanjin KAL has sincerely tried to improve the company’s governance structure and financial conditions and enhance the value of shareholders,” it went on to say, continuing, “Given that the former vice president and Bando Construction have unclear interests and conditions in the aviation industry are deteriorating, it is doubtful if a change in control will contribute to the value of the enterprise.”