South Korea’s antitrust agency is considering lodging a complaint with the prosecution against two third-generation family members of Hanjin Group for allegedly favoring units wholly owned by them and obtaining improper gains by funneling steady workload from the parent company.

According to multiple industry sources on Thursday, the Fair Trade Commission has notified Hanjin Group in its examination report in early July that Cho Won-tae, vice president of Korean Air Lines Co. and Cho Hyun-ah, the carrier’s former vice president - both offspring of Hanjin Group Chairman Cho Yang-ho - are suspected of committing favoritism. The FTC report also accused Korean Air of conspiring in favoritism by allocating work to the companies under their ownership.

Based on the examination report, the FTC is slated to hold a full-session meeting in early September at the earliest to vote to confirm their conviction and file charges with the prosecution. It is considered very rare for the FTC to press charges against conglomerate family members.

The two offspring of Chairman Cho are accused of instructing orders to funnel steady workload to UniConverse Co., an information technology (IT) service company, and Cybersky Co., an in-flight duty free shop, which are both units under Korean Air. Won-tae and Hyun-ah allegedly used their positions as Korean Air executives and owner family status.

UniConverse and Cybersky are units in which Chairman Cho and his three offspring - Won-tae, Hyun-ah and Cho Hyun-min - had whole ownership until last year. Over the last five years, the two companies raised sales of 162 billion won ($147.6 million), of which 74 percent or 120 billion won came from work given by Hanjin Group units including Korean Air.

The FTC is known to have secured evidence that the two siblings instructed orders to give work to UniConverse and Cybersky. An unnamed FTC official said pressing charges against individuals was more complicated than taking action on a company.

It would make the first time for the FTC to accuse owner family members over unfair practices such as favoritism.

In the past, there were cases in which the FTC accused former Daewoo Group Chairman Kim Woo-choong, former Daeju Construction Co. Chairman Huh Jae-ho, and Hyosung Group Chairman Cho Suck-rai - but they were all of submitting lack of materials and falsely reporting their units.

Hanjin Group claims the Cho family members are not liable as they have sold their shares in the companies in Cybersky to Korean Air in November, last year. FTC Chairman Jeong Jae-chan, however, said in a press conference in May that past wrongdoings cannot be excused just because they no longer own the shares.

Nine session members are expected to vote based on the report and appeal submitted by Hanjin Group. The two scions of Hanjin Group could face prosecution probe within the year if FTC confirms its preliminary finding next month.

By Na Hyun-joon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]