Hanjin Group to deal with harsh criticism of President Park

Hanjin Group to deal with harsh criticism of President Park. September. 18, 2016 08:03. by 김창덕기자 drake007@donga.com.

Hanjin Group is strained by the President’s strong criticism over the company at a cabinet meeting on Sept. 13. Speaking at the meeting, President Park Geun-hye openly blamed Hanjin Shipping Co. and said that the company was responsible for the global logistics crisis. It has been said that Hanjin would try to assess the mood of Cheongwadae and other government agencies and take follow-up measures on Sept. 19 when Chuseok holiday ends.

“The company is closely keeping an eye on the movement of the government and media after the president’s comment to find out whether the crisis of Hanjin Shipping may spread over the entire group and the group would take actions no matter what in order to come up with countermeasures when the holiday is over,” a high level officer of the company said Saturday,

Korean Air, the top shareholder of Hanjin Shipping, had decided to provide a loan of 60 billion won, conditional on the shipper providing its stake in overseas terminal as collateral and Hanjin Group Chairman Cho Yang-ho promised to provide 40 billion won of his own money. However, only 40 billion won from the chairman was delivered on Sept. 13 and the rest 60 billion won is expected not to be offered due to concerns over embezzlement.

Hanjin Group feels mounting pressure to prepare additional measures to support Hanjin Shipping now. Although the Strategy and Finance Minister Yoo Il-ho and FSC Chairman Lim Jong-ryong criticized the company before, this time is different. The president came forward to blame the company by herself.

Inside Hanjin Group, concerns were raised that the president’s comment would negatively affect Fair Trade Commission (FTC)’s on-going review of funneling and securing steady workload. The antitrust agency was considering lodging a complaint with the prosecution against Cho Won-tae, vice president of Korean Air Lines Co., and Cho Hyun-ah, the carrier’s former vice president. The growing negative public sentiment on Korean Air and other main subsidiaries of the group is another huge burden on the company.

Hanjin Shipping injected a total of 50 billion won from the Chairman Cho and 10 billion won from former chairwoman of Hanjin Shipping Choi Eun-young to unload the cargo from Hanjin vessels. However, these are not insignificant amounts to normalize the operation of 83 vessels excluding 17 vessels that were returned to international ship-owners. After four countries the US, Japan, the UK, and Singapore (temporarily) issued the stay order on seizures of ships and cargo, the process of discharging the cargo from vessels were still slow.

Meanwhile, Hyundai Merchant plans to add vessels to the US to ease Hanjin squeeze and the second batch of vessels will leave Busan on Sept. 18 to Los Angeles of the US. Schedule of the vessels for the Europe route will be confirmed by the end of this month.