High court to decide fate of business tycoonsThe Seoul High Court will make rulings tomorrow that will affect the top management of Hanwha and LIG, two of the country’s biggest conglomerates.
On the same day, the court is scheduled to rule on a family inheritance squabble between siblings Lee Kun-hee, chairman of Samsung Group, and his estranged brother Lee Maeng-hee, former chairman of CJ Group.
People are particularly paying attention to the Hanwha and LIG cases to see if the courts will continue their tough stance against business chiefs breaking the law, which began last year. Before that, Korean courts tended to be lenient to corporate chiefs found guilty of embezzlement or other wrongdoing, especially among families that control business groups, in recognition of their contributions to the national economy.
At 3:30 p.m. tomorrow, the Seoul High Court is scheduled to rule on corporate malfeasance convictions of Kim Seung-youn, chairman of Hanwha Group, the country’s 10th-largest company. Kim, known for his dynamic leadership of the group, was sentenced in August 2012 by the Seoul Western District Court to four years in prison and was ordered to pay a 5.1 billion won ($4.7 million) fine for embezzlement and breach of trust.
The court convicted Kim, 62, of using about 320 billion won of Hanwha’s money to pay back the debts of companies he ran under fake names from 2004 to 2006 and inflicting losses on the group by selling stakes to his family at artificially low prices.
The sentence was reduced in an appeals trial in April to three years in prison and a fine of 5.1 billion won.
Last September, the Supreme Court reversed the high court ruling, saying some of the breach of trust charges were not proven. It ordered a retrial in the high court.
Hanwha expressed hope that its chairman will receive a lighter punishment than three years in prison.
“Though it is hard for us to gauge the expected sentence, we do hope a lighter sentence will be handed down,” said an official at Hanwha, speaking on the condition of anonymity.
“With the absence of the top decision-maker, it has been difficult to make decisions on investments that require big capital investments, such as a solar energy project. Talks about further construction projects in Iraq have also been stalled.”
Because of his poor health, Kim was granted suspension of detention and was released from jail in January 2013. Kim’s suspension ends in Feb. 28.
The court is also scheduled to deliver its verdict on Koo Cha-won, chairman of LIG Group, who was convicted by a lower court last September for fraudulently issuing commercial paper of more than 200 billion won in an effort to save LIG Engineering and Construction, a construction subsidiary that was about to fail. The 78-year-old chairman was sentenced to three years in prison.
The Seoul High Court is also scheduled to deliver a verdict on the country’s biggest chaebol family feud.
Lee Maeng-hee, the 82-year-old first son of Samsung founder Lee Byung-chull, appealed a ruling by the Seoul Central District Court last February that favored his younger brother Kun-hee in an inheritance dispute worth 4 trillion won. Lee Maeng-hee, the former chairman of CJ Group, is the father of CJ Chairman Lee Jay-hyun, who is now on trial for massive tax evasion and embezzlement.
In 2012, Maeng-hee filed a lawsuit against his younger brother demanding the return of part of an inheritance that, he said, Kun-hee secretly incorporated into his assets through bank accounts in false names. Although the Samsung founder passed away in 1987, Maeng-hee insisted he didn’t know his inheritance had been pocketed by his brother until a June 2011 tax probe.
Maeng-hee asked for the return of the ownership of Samsung Electronics and Samsung Life Insurance shares.
On Feb. 1 last year, the Seoul Central District Court ruled that the 10-year statute of limitations for inheritance issues had expired for the stake in Samsung Life Insurance, though some of the stocks were indeed left to Maeng-hee and other siblings.
Regarding claims of Samsung Electronics, the court ruled it was difficult to consider the stakes as part of the siblings’ original inheritance.
During the last hearing at an appeals trial last month, Maeng-hee’s legal team disclosed a letter from the older brother to Kun-hee, making public private matters inside the Lee family, such as Maeng-hee’s regret over Kun-hee not attending the funeral of their mother in 2000.
“As a public figure who is under public attention, I am very sorry that I have brought a family dispute to a court and caused concern to the people,” said the older brother in the letter.
BY KANG JIN-KYU [firstname.lastname@example.org]