Turmoil at Korean Dynasty Deepens as Misdeed Allegations Mount
(Bloomberg) -- Add tax evasion and embezzlement to the mounting list of allegations that one of Korea’s richest families is facing, deepening the turmoil at a business dynasty that’s already been disgraced by a string of scandals involving rage-driven abuses of power.
About 30 investigators descended on the head office of Korean Air Lines Co. on Thursday and seized documents as part of a probe into the allegations, spelling more trouble for the controlling family headed by Chairman Cho Yang-ho. A Korean Air spokesman confirmed the raid but didn’t elaborate, while a spokeswoman for the Seoul Southern District Prosecutors’ Office said the investigation was continuing.
The latest raids come on the back of stepped up scrutiny by President Moon Jae-in’s administration into family-run conglomerates, known in Korean as chaebol. Moon won elections last year, riding on a public sentiment that’s decidedly turned against the scandal-plagued chaebol and led to the impeachment of his predecessor. In his campaign, Moon had pledged to wipe out cozy ties between government and business.
Korean Air, the flagship of Hanjin Group, is no stranger to scandals. The controversies have mostly involved public bad behavior by Cho’s family members.
About four years ago, Cho’s eldest daughter forced a plane to return to the gate at New York’s John F. Kennedy Airport in what’s now called the infamous “nut rage” incident. This year, his youngest daughter allegedly threw water in the face of an advertising agency worker during a business meeting. Cho has fired both of them since from their positions in the group. Walter Cho, the only son, is the president of Korean Air.
Thursday’s raid followed a complaint by authorities that Cho, 69, didn’t pay taxes when he inherited some overseas assets from his late father, Yonhap News reported earlier. Prosecutors are also looking into whether the Cho family embezzled more than 20 billion won ($19 million), it said.
Shares of the carrier declined 0.2 percent as of 3:20 p.m. in Seoul on Thursday after dropping as much as 1.1 percent earlier.
The elder Cho this month stepped down as the chief executive officer of Jin Air Co., the group’s low-cost carrier, after the transport ministry found out that his youngest daughter, a U.S. citizen, held a position barred for foreign nationals.
Cho’s wife was questioned by police over assault and abuse allegations. Yonhap reported this week separately.
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