(LEAD) Daughters of Korean Air chief to step down amid abuse of power criticism

(ATTN: CHANGES headline, lead; UPDATES with more info in 2-6 paras)

SEOUL, April 22 (Yonhap) -- The two daughters of Korean Air Lines Co.'s chairman will step down from all duties immediately, the company said Sunday, amid growing allegations of abuses of power.

South Korea's largest full-service carrier said the decision was made by the chairman and CEO.

"I sincerely apologize for upsetting the general public and employees at Korean Air over issues related to members of my family," Korean Air chief Cho Yang-ho said. He said his two daughters will be stripped of all their responsibilities.

The move comes as Cho Hyun-min, Korean Air's senior vice president and the chairman's youngest daughter, faces a probe over accusations of having thrown water in the face of an ad agency manager during a meeting last month.

She is the younger sister of Cho Hyun-ah, who made headlines four years ago for the high-profile "nut rage" scandal. The elder Cho was tapped as the new president of KAL Hotel Network last month, as well.

The chairman, in addition, said the company will appoint a professional executive, Suk Tai-soo, CEO of KAL Hotel Network, as Korean Air's new vice chairman. The move is expected to breathe new life into the family-run business group, which has struggled with mounting scandal.

The chairman's action comes hours after revelations emerged that Cho ordered the soundproofing of his office on Friday and Saturday, and a day after the country's customs office searched the homes of Cho's children on suspicion that they brought luxury goods into the country using Korean Air to bypass paying duties.

"It is our understanding that the chairman ordered the renovations of his seventh floor office," an airline employee said. His claims were backed up by others working for the company, although none wanted to reveal their names.

In addition, the chairman's wife, the head of the Ilwoo Foundation, has also come under fire for supposedly abusing those under her in the past.

A Korean Air spokesperson confirmed the work was carried out at the offices of all executives and that soundproofing was not involved.

He added that there was some use of silicon to fill in cracks in the door leading to the chairman's office.

Industry insiders said that the latest allegation could be interpreted as Cho and the company avoiding taking steps to change a corporate culture in which bullying and some degree of verbal abuse may have been tolerated. They said the renovations could be seen as a move to prevent leaks of such bad behavior.

"If public opinion views the renovations in this light, that situation could get worse for Korean Air," he said.

Meanwhile, South Korea's customs office, which conducted a search over the weekend, is trying determine if the family engaged in tax evasion in regards to luxury goods.

"Investigators are cross-checking items that were bought by the Cho family using credit cards with those reported to customs to see if there were any deletions," an official said.

He claimed authorities have secured "evidence" in the form of photos that some goods that were brought into the country duty-free without being reported to customs.

Once a full list of goods that were not reported to customs is compiled, authorities will determine whether to question Cho and his family to see if they engaged in unlawful actions, the official said.
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