Chairman Hyun-bum Cho's Prison Management [Choi Sua's Business Watch]

View of Hankook & Company Group Headquarters. Photo = Hankook & Company Group

| NewsWatch= Reporter Choi Sua | Hyun-bum Cho, Chairman of Hankook & Company Group, is scheduled for his full-term release this September, two years after being incarcerated on embezzlement charges. As it has been observed that Chairman Cho continued "prison management" during his detention, the industry’s attention is focused on his future moves and the direction of the group’s management following his release.

Chairman Cho was initially indicted on charges of occupational embezzlement and breach of trust amounting to 20 billion KRW, including the private use of corporate cards, and was sentenced to three years in prison in the first trial. However, in the second trial, the amount of embezzlement was recalculated to approximately 1.9 billion KRW, leading to a reduced sentence of two years, which was finalized by the Supreme Court on the 8th.

Chairman Cho was arrested in March 2023 and spent eight months in prison before being released on bail in November of that year. However, following the 2025 first-trial verdict, his bail was revoked, and he was taken back into custody in court. Since the period spent on bail is not included in the prison term, Chairman Cho is expected to be released in September upon completing his full two-year sentence.

The aftermath of the legal risks spanning nearly three years has been severe. Last March, amid mounting pressure to resign from civic groups such as Solidarity for Economic Reform, Chairman Cho stepped down from his position as an inside director of major subsidiaries and changed his title to non-registered chairman. Consequently, his activities on the boards of directors of key affiliates have officially ceased.

The fact that Chairman Cho received billions of KRW in compensation while in custody has also become a point of contention. A shareholder derivative suit is currently underway, seeking the "return of salary for the period when practical participation in management was impossible." The shareholder alliance argues, "It is difficult to recognize a rational proportional relationship in receiving high compensation while being unable to conduct board activities."

However, interpretations of the shareholder alliance's claims vary. Some observe that Chairman Cho, even while incarcerated, remained informed about management matters and acted as the ultimate decision-maker. An official familiar with the situation at Hankook & Company stated, "I understand that Chairman Cho continued to listen to and pay close attention to major management issues while in prison."

Assessments also suggest that Chairman Cho maintains substantial control as the largest shareholder, holding 42% of the group's shares even after resigning from his inside director post. In 2020, Honorary Chairman Yang-rae Cho handed over management rights to his second son, Chairman Cho, among his two sons and one daughter.

Although a sibling conflict subsequently arose with the eldest son, former Hankook & Company advisor Hyun-shik Cho, the advisor’s stake currently stands at approximately 19%, less than half of Chairman Cho’s holdings. Accordingly, many in the business world predict that Chairman Cho's management rights will remain solid after his release.

A mountain of tasks awaits Chairman Cho upon his return to the field. Currently, logistics costs have risen due to the blockade of the Strait of Hormuz, and raw material prices for tires are reported to have increased by dozens of percentage points. A company official expressed internal concerns over rising cost pressures, stating, "It is a situation where it is difficult to immediately reflect the increase in raw material costs in the selling price." Responding to the external business environment is interpreted as a matter that requires Chairman Cho’s direct decision-making.

Regarding Chairman Cho’s future role and management direction, the official said, "We plan to quickly normalize the management of Hanon Systems, which was acquired last year, and focus on strengthening R&D and improving the corporate structure to enhance the company's competitiveness." The official added, "As the headquarters is on the verge of entering the top 30 in the business rankings, we plan to fulfill a greater sense of responsibility by striving for social contribution and the realization of corporate values."

Reporter Choi Sua newswatch@newswatch.kr