Cho Hyun-bum, chairman of Hankook & Company, had his prison sentence finalized by the Supreme Court, but with only about four months left to serve, analysts say management uncertainty has effectively been resolved. Cho is expected to officially return to the front line of management in early Sep., focusing on normalizing Hanon Systems and identifying new businesses.
On the 8th, the Supreme Court's First Division (presiding Justice Ma Yong-ju) finalized the lower court ruling that sentenced Cho to two years in prison on charges including embezzlement and breach of trust under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes. Cho had initially faced charges of embezzlement and breach of trust totaling about 20 billion won, but approximately 2 billion won was ultimately recognized. Immediately after the ruling, Hankook & Company said it "respects the court's decision."
Although Cho's sentence was not reduced, Hankook & Company is now able to fix the date of his return to management. Cho has been serving time since he was sentenced to three years in prison at the first trial in May last year. As a result, about four months remain on Cho's two-year term, and he will be released in early Sep. upon completion of the sentence.
In business circles, Cho is expected to make an official return to management immediately after his release. The most urgent task is normalizing Hanon Systems. Hanon Systems traces its roots to Halla Climate Control, a 1986 joint venture between Ford and Mando Machinery, and it was integrated into the Hankook & Company group in Nov. 2024. At the time of acquisition, Hanon Systems had been posting continued losses, and its liability ratio exceeded 250%.
In the first quarter of this year, Hanon Systems posted operating profit of 97.2 billion won, up 361.1% from a year earlier, but its liability ratio remains high at 165%. Cho is expected to focus on securing the company's long-term financial soundness.
Finding new businesses is also on the agenda. With the acquisition of Hanon Systems, Cho said he would transform the group into a comprehensive mobility company beyond tires and expand group revenue to 30 trillion won by 2030. Since the group already produces lead-acid batteries as an in-house business, development of lithium-ion batteries tailored to the electric-vehicle era is expected to gain speed. Late last year, while Cho was incarcerated, Hankook & Company spun off the unit in charge of next-generation battery development as a separate organization.
There is also a need to resolve conflict between siblings. Cho's older brother, former Hankook & Company adviser Cho Hyun-sik, has joined hands with the Hankook & Company shareholder alliance to keep management in check. The shareholder alliance filed a shareholder derivative suit, saying Cho received a large compensation package while in detention and demanding that he repay 5 billion won to the company. Separately, the former adviser filed a lawsuit to nullify the resolution in which Cho "voted for himself" on the agenda setting the compensation cap for him as an inside director, and won.
In Feb., Cho resigned from his position as an inside director at Hankook & Company. The move was aimed at preventing a family management dispute from escalating into a controversy over board operations. It remains unclear whether Cho will return to the board in Sep. Hankook & Company said, "The appointment of Cho as an inside director is a matter for a shareholders' meeting resolution."