Hanjin Group Owner Family under Pressure from NPS and KCGI

The National Pension Service (NPS) and the Korea Corporate Governance Improvement (KCGI) are continuing to put pressure on Hanjin Group owners involved in management disputes and inheritance tax controversies. The NPS is increasing its shareholding in major Hanjin Group subsidiaries to strengthen its influence and the KCGI is asserting that the top management of the group is making no effort at all to improve the group’s financial structure.

The NPS announced on Jan. 7 that its shareholding in Korean Air rose from 9.9 percent to 11.36 percent. The NPS announced the previous day that it increased its shareholding in Hanjin Transportation from 7.54 percent to 9.62 percent to become the third-largest shareholder in the company behind Hanjin KAL and the KCGI.

Last year, the NPS objected to the late Hanjin Group chairman Cho Yang-ho’s reappointment as a Korean Air inside director and he lost his control in the end. The NPS sold its Korean Air and Hanjin KAL shares after last year’s shareholder meeting but is currently acquiring subsidiary shares again. The NPS recently adopted new guidelines for active shareholder activities, which means it can raise its voice regarding the management disputes within the owner family and inheritance taxes related to the late Hanjin Group founder Cho Joong-hoon’s concealed wealth.

In the meantime, the KCGI, an activist private equity fund, posted a YouTube video on Jan. 7 to make an issue of the management’s efforts for debt reduction. The KCGI has posted similar videos targeting Hanjin Group since August last year.

“The situation of last year can be repeated if the NPS and the KCGI unite against the owner family,” said an industry source, adding, “It seems that the family will join forces more closely to block the possibility.”