Korean Air boss dies weeks after board removal over scandals

SEOUL, Korea, Republic Of — Korean Air’s chairman, whose leadership included scandals such as his daughter’s infamous incident of “nut rage,” has died due to illness, the company said Monday.

Cho Yang-ho had been indicted on multiple charges, including embezzlement and tax evasion, and his death came two weeks after shareholders voted to remove the 70-year-old from the company’s board over a series of scandals surrounding his family. Cho’s death will likely force a court to dismiss his criminal case.

The company said in a statement that Cho died at a hospital in Los Angeles but did not specify his illness or provide other details. Cho had remained chairman, which is a non-board role, even after shareholders ousted him from the board. He had expressed his intent to continue participating in management.

A senior Korean Air executive said Cho had been receiving treatment for an unspecified lung illness since late last year and that his condition “worsened rapidly” following the shareholder vote, apparently because of shock and stress. The executive didn’t want to be named, citing office rules.

Korean Air’s corporate flag and the South Korean flag were flown half-staff at the country’s headquarters in downtown Seoul.

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Cho’s eldest daughter, Cho Hyun-ah, who was formerly the head of the airline’s cabin service, received worldwide notoriety in 2014 after she ordered a Korean Air passenger plane to return to a terminal at John F. Kennedy International Airport in New York because she was angry that the crew served her macadamia nuts in a bag instead of on a plate.

The incident, dubbed “nut rage,” generated international headlines and severely tarnished the Cho family’s image, while highlighting broader concerns about the sense of entitlement among the moneyed elite in South Korea.

Cho Hyun-ah was sentenced to one year in prison for violating aviation law but was released early when a higher-level court suspended the sentence.

The Cho family also faced intense criticism after company employees alleged they were subjected to mistreatment and tantrums.

Cho’s wife was summoned last May by South Korean police to question her about allegations that she abused and assaulted employees. Lee Myung-hee was accused of physically or verbally abusing more than 10 former and current employees of Korean Air’s parent company.

Cho’s younger daughter, Cho Hyun-min, also was investigated by state prosecutors for potential assault for allegedly hurling a cup of water during a business meeting. No charges were filed.

Before his reputation was hit by scandals, Cho Yang-ho, who led Korean Air since 1992, had been credited for overseeing the company’s growth into one of Asia’s biggest airlines. Korean Air, which began in 1969 with eight planes, now operates 166 aircraft with international flights to 111 cities in 43 countries.

Cho was also the chairman of the Hanjin Group, a global transportation conglomerate of dozens of companies that includes the airline. He was also was the co-chairman of the Korea-U.S. Business Council and vice chairman of the Federation of Korean Industries.

He was involved in the bidding process and preparations for the 2018 Winter Olympics held in South Korea’s ski resort town of Pyeongchang and headed the Olympic organizing committee for two years before stepping down in 2016.

Cho’s resignation was initially described as voluntary, but he later said he left the committee under “unjust” pressure from the government of former conservative President Park Geun-hye. The committee had rejected an Olympic construction deal for a Swiss company that reportedly had a business partnership with Choi Soon-sil, a longtime friend and mentor of Park.

Park is now serving a lengthy prison term over multiple corruption charges.

South Korean prosecutors indicted Cho last October on multiple charges, including evading taxes and pocketing tens of millions of dollars through embezzlement and breach of trust. His trial had been expected to begin in the coming weeks.

Cho was previously convicted of tax evasion in 2000, facing charges with his father and brother. The Chos were charged with receiving millions in rebates when they purchased airplanes from Boeing and Airbus and evading taxes on the money. The tax probe came after the country’s president criticized Korean Air’s poor safety record.

The Cho family scandals have increased public criticism about South Korea’s “chaebol,” a privileged group of family-owned conglomerates that have been tied to corruption and exploitive behaviour.

Korean Air shareholders’ successful removal of Cho from the company’s board was seen as a milestone in a country that has been long criticized for its lax enforcement of corporate-governance rules on large companies.

Analysts also saw the vote’s outcome as a positive sign that Korean Air would finally be able to keep its “owner risk” under control after Cho’s unchecked reign had damaged the company’s value and reputation.

The stock price of Hanjin-KAL, the holding company of the Hanjin Group, rose by more than 20 per cent on Monday. Shares of Korean Air and other Hanjin affiliates, including Jin Air, also rose modestly.

Current South Korean President Moon Jae-in has vowed to curb the excesses of the chaebol. However, bad economic news appears to have softened the government’s approach to these companies, which dominate the country’s economy and are crucial to Moon’s plans for job creation.

Cho is survived by his wife, a son, two daughters and five grandchildren.

Kim Tong-Hyung, The Associated Press