Hanwha hopeful it can appeal Kim’s case

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Hanwha hopeful it can appeal Kim’s case

Hanwha Group said yesterday it will appeal a court ruling that landed its chairman in prison on charges of graft as it believes the case was not convincingly proven and that there are sufficient grounds to overturn the decision.

Chang Il-hyung, president of the group’s management and planning headquarters, told reporters yesterday that prosecutors failed to provide irrefutable evidence showing that Kim Seung-youn was directly responsible for the group’s losses.

Kim is being held at the Southern Corrections Institution in Seoul after he was sentenced to four years in prison and slapped with a 5.1 billion won ($4.49 million) fine on charges of embezzlement and breach of trust by the Seoul Western District Court on Thursday.

“There are misapprehensions in the court’s ruling,” Chang said in a press conference at the company headquarters in central Seoul.

Prosecutors sought to hold Kim accountable for losses of 1.5 trillion won at the group, but the court decided he was only responsible for 280 billion won of the total. As such, Kim was found guilty of breach of trust for 20 percent of the total losses.

Chang said the group finds the ruling unacceptable.

The graft accusations date back to the Asian financial crisis in the late 90s, when tertiary contractors of Hanwha suffered from skyrocketing debt. The group helped them repay their debts after deciding it was in the group’s best interests. As such, it used the proceeds of asset sales - including real estate - to cover the debts, often selling them at below-market prices.

“The court said the chairman should take responsibility for causing the losses,” said Chang, “but is it wrong to make smaller losses in order to prevent bigger ones?”

The court made the ruling based on the assumption that Kim must have masterminded the move, but Chang said the group has evidence proving he was not involved in the sales.

Prosecutors even claimed the debt-ridden contractors were actually being run by Kim under borrowed names, a charge Chang refuted. “The contractors were operated by Hanwha’s subsidiaries, not the chairman,” he said.

On Friday, the group submitted notification that it would file an appeal.

Chang said that while some projects in the pipeline are considered safe, others may be at risk due to the negative publicity as the group has been fielding numerous inquiries from concerned overseas clients.

“If Kim is kept behind bars for a significant length of time, the group will inevitably suffer in terms of overseas contracts, he said.

By Song Su-hyun [ssh@joongang.co.kr]

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