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Bloomberg
South Korea’s police raided the head office of Korean Air Lines Co. in Seoul to probe alleged misuse of company funds, the first crackdown on a major local conglomerate after President Moon Jae-in came to power in May.
Police are investigating allegations that Chairman Cho Yang-ho, the head of Hanjin Group that controls Korean Air, had interior work done in his house between May 2013 and August 2014 and passed on the expenses to a hotel that was being built around the same time near the Incheon airport, the Korean National Police Agency said. Korean Air will cooperate with the probe, a representative said, declining to elaborate.
During his election campaign, Moon had pledged to reform the family-run mega-corporations — locally called chaebol — saying an economic strategy focused on these groups caused low wage growth and joblessness. After taking office, Moon appointed a shareholder
activist Kim Sang-jo as head of the
Fair Trade Commission to closely
oversee these business groups.
An influence-peddling scandal involving some of these companies led to the impeachment of his predecessor and the indictment of Jay Y. Lee, vice-chairman of Samsung Electronics Co. Lee, the de-facto head of the Samsung group, is fighting the charges. In a separate case, some Lotte Group family members face criminal charges ranging from embezzlement to fiduciary breaches amounting to about $243 million.
In his May 10 inaugural speech, Moon reaffirmed his intention to get tough on chaebol, vowing to cut ties between government and business groups. Before he was elected, his party couldn’t generate enough support for legislation that would have limited the power held by the handful of rich families behind the empires. Now that he runs the government, he can issue executive orders and
bypass parliamentary resistance.