Hanmi Pharmaceutical CEO Park Jae-hyun said there was pressure from Shin Dong-kuk, chairman of Hanyang Precision and the largest shareholder of the holding company Hanmi Science, in connection with the recent "cover-up allegations for an executive accused of sexual assault."
After criticism erupted that one of Korea's leading drugmakers failed to immediately separate the perpetrator and victim and, instead of disciplining the executive accused of sexual misconduct, effectively paved a "fast track to reemployment," Park stepped to the forefront.
Park claimed that legitimate personnel action against the executive did not take place due to pressure from Chairman Shin and released related audio recordings.
We met CEO Park Jae-hyun, 57, on the 18th at a location in Seoul. Park, who joined Hanmi Pharmaceutical as a researcher in 1993 and rose to CEO, said the reason for going public was that "as a professional manager, I tried to restore discipline in the organization, but excessive intervention by the major shareholder became an obstacle."
Shin Dong-kuk, 75, serves as an outside nonexecutive director on the boards of Hanmi Science and Hanmi Pharmaceutical.
After our Feb. 13 exclusive report, [Exclusive] Sexual assault report shelved and a "fast track" to a rival… controversy over Hanmi Pharmaceutical's "shielding of a Paltan plant executive," we received tips that associates of the alleged perpetrator inside the Hanmi Pharmaceutical plant were trying to identify the whistleblower.
An employee of the Hanmi Pharmaceutical group said, "Even though I am not the whistleblower, I was directly suspected by my superior, which made me angry and feel pressured to explain myself," adding, "I am anxious that I may be misunderstood internally and suffer disadvantages."
Unfavorable treatment of a worker who reports workplace sexual harassment and efforts to identify the whistleblower (public-interest reporter) are illegal acts under the Public Interest Whistleblower Protection Act and the Equal Employment Opportunity Act. Pressure or discipline against a whistleblower is punishable. When the reporter asked whether any attempt had been made to identify the whistleblower, Hanmi Pharmaceutical's PR team said, "We had no knowledge whatsoever of any attempt to identify the whistleblower," distancing itself from the allegation.
CEO Park said, "The sexual assault incident occurred while the perpetrator was in a very close relationship with Chairman Shin," adding, "I tried to handle it coolly and objectively, but there was pressure from Chairman Shin."
Park produced recordings containing remarks suggesting that Chairman Shin was shielding the perpetrating executive. Park said, "If I had not recorded it, they would have tried to pin all the blame on me as CEO."
According to the recording, Chairman Shin defended the perpetrator by saying, "He's not someone who would rape a woman," and, cutting off Park's explanation of the need for discipline, rebuked him, saying, "Say something that makes sense."
The case began in December last year when a public-interest report was filed about sexual misconduct by Executive A at the Paltan plant. To protect the victim, Park ordered the perpetrator to work from home, but A reportedly ignored this and came to the office, saying the executive, a close associate of Chairman Shin, had instructed him to "come to work."
Park said, "This is a case where the perpetrator exploited a close relationship with the major shareholder to nullify the CEO's lawful personnel order."
Chairman Shin Dong-kuk, a junior from the hometown of the late Chairman Lim Sung-ki, is the "key man" holding 16.43% equity in Hanmi Science. At Lim's urging, Shin had bought Hanmi Science shares, and after Lim's death in 2020, he emerged as the figure who could decide the outcome of the founding family's management control dispute sparked by inheritance tax issues.
Initially, he promised to establish a professional management system and settled the management dispute for the time being, but Park claimed, "In reality, it was a continuation of illegal, excessive management interference."
Park stressed that this disclosure was a decision to uphold shareholders' right to know. He said, "I cannot stand by while the corporate culture built by Chairman Lim Sung-ki is being dismantled because of one major shareholder," adding, "No employee should suffer disadvantages for refusing to comply with an unfair order from a particular major shareholder."
After reporting on the sexual assault case, considering signs that employees inside the Hanmi Pharmaceutical group were trying to identify the whistleblower, shareholders' right to know, and Chairman Shin's past responses to media reports, we decided to release the audio file of the meeting between CEO Park and Chairman Shin Dong-kuk. Only the detailed descriptions of the sexual assault, and the real names of the perpetrator and the perpetrator's associates that appear in the recording, were bleeped; nothing else was re-edited.
We sought Chairman Shin Dong-kuk's position on this, but he did not respond even to a text message containing specific questions. On the morning of the 20th after the article was published, Shin called and argued, "I did not block anything, and I did not shield the sexual assault perpetrator or intervene unjustly. This is unfair." He added, however, "Rather than offering a rebuttal now, I will prepare materials and request a formal interview later." The following is a Q&A with CEO Park.
–Why did you record the conversation with Chairman Shin Dong-kuk?
"As CEO, I rarely have reason to record directly in the course of work. However, in a previous meeting with Chairman Shin, I had difficulty because he frequently changed his words and logic, and he even fabricated things to shift responsibility onto me. After that, I recorded to gauge his intent precisely. I judged that this matter (the Paltan plant executive's sexual assault of an employee) was highly serious and in the public interest, so I recorded it. If I had not recorded it, they would have tried to pin all the blame on me as CEO."
–The report to an external public-interest channel that Executive A at the Paltan plant sexually assaulted an employee came in December. What actions did the company take afterward?
"First, to protect and separate the victim, I instructed the perpetrator not to contact the victim until the disciplinary process was concluded. However, a secondary harm issue arose when the perpetrator contacted and met the victim without authorization, so I ordered the perpetrator to work from home. The perpetrator, however, said Executive B, a close associate of Chairman Shin, told him, 'Just come to the office,' and he violated the order and kept coming to work. Regardless of the fact that the perpetrator is close to Chairman Shin, the sexual assault was objectively confirmed, so I sought to secure clear grounds for discipline through objective and transparent procedures."
–Under current law, "prompt investigation" and "protective measures for the victim" are mandatory when workplace sexual harassment occurs. Are you saying Chairman Shin, through his associate, issued instructions that ran counter to the order to separate the perpetrator and the victim?
"Yes. Even though I immediately ordered the perpetrator to work from home after hearing reports that the perpetrator met the victim unilaterally, he brazenly came to the plant, further heightening concerns about secondary harm."
–As a rule, once an executive's misconduct is confirmed, the CEO can immediately dismiss the person by executive authority.
"After recognizing the report, we convened the personnel committee and were proceeding with the process. But during handling, I heard talk that 'Chairman Shin will not sit by.' In fact, at the plant where the case broke, there were rumors that because the perpetrator was being protected by Chairman Shin (was in Chairman Shin's line), I would not be able to take action."
–Why do you claim he shielded the perpetrator?
"Chairman Shin and the perpetrator were effectively sharing all information about the Hanmi Pharmaceutical plant without my consent or approval as CEO. Chairman Shin instructed me to cut costs by using low-priced raw materials of potentially low quality, to delay replacing aging equipment, or to minimize quality-related facility investments. At the time, I refused, citing 'principles of quality management.' Then the perpetrator, who was the plant head, bypassed me and carried out these instructions from Chairman Shin, thereby building solid trust with him."
–Can he intervene in a sexual assault case involving an employee inside Hanmi Pharmaceutical just because he is the largest shareholder?
"(Sighs and pauses) So I requested a meeting with Chairman Shin earlier this month and met him in person to convey clearly and politely, 'Please do not get involved in this matter.'"
–Why are you disclosing the recording of your meeting with Chairman Shin?
"I can no longer stand by while Hanmi (the Hanmi Pharmaceutical group) is being damaged because of one major shareholder. I do not believe Hanmi is a company that Chairman Shin can run at will based only on the power of his equity. Considering Hanmi's corporate culture that Chairman Lim Sung-ki painstakingly built, and his last wish when he passed away that we safeguard Hanmi, Chairman Shin's illegal management interference must be called out, and I resolved to inform other shareholders of it."
–Are you claiming Chairman Shin is improperly interfering in management at the Hanmi Pharmaceutical group?
"Do you think this is the only illegal, unjust instruction from Chairman Shin? There is plenty of direct and indirect evidence that he has engaged in other improper management interference. This squarely contradicts the government's proposed amendments to the Commercial Act."
–What do you want from Chairman Shin?
"I believe no member of the organization should suffer disadvantages for refusing to comply with an unfair and illegal order from a particular major shareholder. Even now, he should honor his own promise to all shareholders to 'establish an advanced professional management system.'"
–A backlash is expected after releasing the recordings. Are you prepared?
"I will bear it. As CEO, I concluded this would harm the company and had to be stopped by any means. Since last year's end to the management control dispute, I have worked with all my strength to put Hanmi back on track. With various achievements—export contracts, domestic prescription sales and profits, preparations to launch an obesity drug—we received good evaluations and the share price has more than tripled. I believe the company could have been rated even higher without Chairman Shin's improper interference. As CEO, I am extremely angry and feel sorry to the other shareholders."