SK chairman given four years in prison

A lower court sentenced SK Group Chairman Chey Tae-won to four years in prison on January 31, for embezzling corporate funds for personal investments.
The 53-year-old tycoon was sent to prison immediately following the verdict by the Seoul Central District Court.
The court found the SK chairman guilty of embezzling some US$44.5 million from SK Telecom Co. and other SK Group affiliates and transferring it to an investment firm headed by a former SK executive to buy stock futures and options in 2008.
The executive, Kim Joon-hong, delivered the money, on the request of Chey’s younger brother Jae-won, to a Korean investor operating a business overseas, the court said.
His brother, Chey Jae-won, vice chairman of SK Group, however, was acquitted of his charges, as the court found that testimonies against him had no credibility.
Chey was also indicted for creating a slush fund of US$12,532,200 by requesting SK executives return a part of their overestimated annual incentives. But the court cleared him of the charge.
Feeling the pressure, Chey stepped down from the top post of SK Group in December last year. He remains a “strategic” shareholder and holds the chief executive position at SK Holdings, SK Innovation and SK Hynix.
“Chairman Chey Tae-won will be harshly criticized for committing crimes and seeking personal gain in exploiting affiliates of his own group,” Judge Lee Won-bum said in his ruling. “(He has) broken the public’s trust in SK Group which has been taking a lead in social responsibility since 1970,” he said, adding that the chairman had shown no sign of repentance for his crimes.
The disgraced SK chief strongly rejected his charges. “But I didn’t do anything wrong. This is all I can say,” the chairman told the court before he was taken into custody.
SK Group will immediately appeal the court’s decision, SK officials said in a statement released right after the ruling.
The head of the country’s third-largest conglomerate was put behind bars for the second time. He was imprisoned in 2003 on charges of accounting fraud totaling US$1.352 billion before being released on appeal. He was granted a presidential pardon in 2008.
The Federation of the Korean Industries expressed regret over the court’s ruling, saying that it would create anti-business sentiment.
Separately on the same day, a Seoul higher court also gave a two-and-a-half-year prison term to Lee Kuk-chul, chairman of SLS Group, on several charges including bribing a former vice culture minister and other high-ranking government officials. Lee’s sentence was reduced to two-and-a-half years from three-and-a-half years in the first trial, but the court sent him into custody right away.
The upper court found Lee guilty of providing former Vice Culture Minister Shin Jae-min with a corporate credit card, on which the official charged nearly US$117,208 in exchange for business favors.
The court, however, acquitted him of falsifying his company’s financial status reports and receiving an additional US$600 million in refund guarantees from a state-run trade insurance firm. The court said in its ruling that the decision was made by the insurance firm itself.
The SLS Group head was at the center of a political debate as he exposed claims of corruption among high-level government officials and lawmakers including President Lee Myung-bak’s brother, Lee Sang-deuk.
The court’s decisions on the country’s two business leaders came to the fore as politicians have been tightening penalties with regards to embezzlement or malpractice on the part of chaebol owners. Chaebols are local family-owned conglomerates.
President-elect Park Geun-hye agreed to introduce stricter penalties with jail sentences for chaebol owners convicted of such crimes. She reiterated that presidential pardons for business leaders would be limited as well. (February 1, 2013)