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| Hankook Tire & Technology headquarters in Seongnam, Gyeonggi Province / Korea Times file |
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| Hankook Tire & Technology CEO Cho Hyun-bum |
Hankook Tire & Technology, a local tire manufacturer, is expected to see a slump in exports of its key products and delays in overseas investments after its CEO Cho Hyun-bum was arrested on charges of embezzlement and breach of trust for a combined amount of 20 billion won ($15 million), according to market watchers.
Thursday's arrest came less than three years after he stepped down as CEO in June 2020 over previous bribery and embezzlement charges. The resignation was prompted by a prison term suspended for four years following his arrest in November of 2019 and subsequent guilty verdict. Cho will serve a prison term if he is found guilty on the latest charges, since he was released on a suspended sentence in 2020.
Whether and how likely the leadership vacuum would drain the business of local manufacturers remains to be seen. Over 90 percent of its sales come from exports. The firm planned to invest 1 trillion won to expand and modernize its manufacturing facilities in the U.S. state of Tennessee, in a move to register a year-on-year increase of 5 percent in sales, underpinned by the stable supply of tires for electric vehicles (EVs) and 18-inch products.
The prosecution launched an investigation into Cho, initiated by a Fair Trade Commission (FTC) fine of 8 billion won against the firm for giving preferential treatment to an affiliate.
For years, Hankook, according to the antitrust agency, bought products made by the affiliate at a higher price and at a profit margin far higher than market rates.
The affiliate registered 87.5 billion won in sales and 32.3 billion won in operating income between February 2014 and December 2017.
The prosecution is looking into whether the increases in the affiliate's profit in the four-year period benefited Cho's family.
Cho is facing allegations that he used company funds to renovate his home and buy expensive cars.
Legal experts say Cho going to prison this time is a likely scenario if the court finds that the alleged embezzlement and breach of trust were premeditated.
"A person on a suspended sentence being indicted for a separate charge is not subject to harsher punishment," a lawyer said on condition of anonymity. "But if the charges are corroborated enough to convince the court that he acted with premeditation, a guilty verdict will follow, putting him in jail immediately."
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