Seoul: Prosecutors have launched an inquiry into Cho Nam-ho, the chairman of Hanjin Heavy Industries and Construction Co., on charges of illicit stock dealings, officials said yesterday.
"We began investigating Cho after the Financial Supervisory Service notified us that (Cho) allegedly used classified insider information to buy company stocks when it was converted into a holding company last year," the Seoul Central Prosecutors' Office said.
The 57-year-old tycoon and HHIC are purported to have purchased roughly 1 million stocks in advance of an official announcement on May 15 last year that HHIC would become a holding company.
HHIC bought 970,000 stocks, estimated at 30,000 to 40,000 won each, while Cho bought 91,180 stocks, worth about 32,700 won each, in early April, about a month before the official announcement.
Cho announced his stock purchase on May 15, allegedly breaching regulations obligating a majority shareholder to notify the government.
Following the May 15 announcement, the stock prices doubled, giving HHIC and Cho trading profits of about 40 billion won ($38 million).
With HHIC becoming a subsidiary of the new holding company, called HHIC Holdings, in August last year, Cho exchanged his HHIC stocks with those of HHIC Holdings. Cho holds a 62-percent stake in the holding company as of March.
HHIC said the stock purchase was made so that the majority shareholder could defend his management rights, and that staff in charge of the mandatory filing made a mistake which was later corrected.
Cho is the second son of late Hanjin Group founder Cho Joong-hoon and younger brother of the current chairman Cho Yang-ho. [28/5/08]
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