Civic Group Files Breach of Trust Complaint Over Hanjin-Linked Share Deals

Hanjin Group Chairman Cho Won-tae Suspicions that Korea Zinc funds were used in transactions linked to Hanjin Group Chairman Cho Won-tae’s inheritance tax obligations have led to a police complaint. With a separate police investigation underway into Hanjin KAL’s use of treasury shares, the latest complaint has raised further questions about the appropriateness of transactions involving shares in an unlisted affiliate. On Oct. 19, the civic group Fair Shareholder Forum filed a complaint with the Seoul Metropolitan Police Agency against six individuals, including Cho, Korea Zinc Chairman Choi Yun-beom and Won Asia Partners CEO Ji Chang-bae, alleging breach of fiduciary duty under South Korea’s Act on the Aggravated Punishment of Specific Economic Crimes. The group alleged that a series of transactions involving Jungseok Enterprise, an unlisted Hanjin affiliate, provided financial advantages to the controlling family while potentially harming the interests of Korea Zinc and Hanjin KAL shareholders. The transactions date back to 2021, when Cho’s family faced an inheritance tax bill of approximately 270 billion won, or approximately $204.21 million, on assets inherited from the late former Hanjin Group Chairman Cho Yang-ho. To raise funds, the family sold a 12.22% stake in Jungseok Enterprise to an investment vehicle managed by Won Asia Partners for 48.15 billion won. The source of the investment vehicle’s funding has become a central issue in the complaint. Of the 50.3 billion won in funding, 49.9 billion won, or approximately 99.2%, reportedly came from Korea Zinc. The complainants have questioned the role of Korea Zinc’s funds in financing the acquisition of the stake. The structure came to light after the investment vehicle was liquidated early during scrutiny of the 2023 SM Entertainment stock manipulation case. The complainants have also questioned the subsequent transactions involving the stake. The shares held by the investment vehicle were sold to Korea Zinc in December 2023 and later acquired by Hanjin KAL, the group’s holding company. In May 2025, Hanjin KAL agreed to purchase the stake for 52.06 billion won, approximately 3.9 billion won more than the original purchase price. Fair Shareholder Forum argued that the sequence of transactions may have provided favorable financial terms to Hanjin Group’s controlling family while adversely affecting the interests of Korea Zinc and Hanjin KAL shareholders. The group cited an estimated annualized return of approximately 2% on Korea Zinc’s investment over about four years, arguing that the figure was below prevailing bank deposit and corporate lending rates and warranted scrutiny of the investment’s profitability. The group estimated that the difference between the actual return and the potential income Korea Zinc could have earned by deploying the funds in alternatives such as loans secured by unlisted shares could have reached 13 billion won. The complainants said the transactions warranted examination of whether the interests of ordinary shareholders at Korea Zinc and Hanjin KAL had been adequately considered in arrangements linked to the Cho family’s inheritance tax obligations. They also argued that the matter raised broader concerns about confidence in the capital markets. Korea Zinc said the transaction was a normal investment, explaining that it held the stake for more than four years before selling it and earned a cumulative return of over 8%. Hanjin KAL declined to comment in detail. The Seoul Metropolitan Police Agency’s Financial Crime Investigation Unit is also investigating a separate case involving the contribution of treasury shares and allegations of breach of fiduciary duty. The handling of the latest complaint will determine whether the transactions warrant further investigation.