Hyosung chairman is sentenced to three years

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Hyosung chairman is sentenced to three years

The Seoul Central District Court sentenced Hyosung Group Chairman Cho Seok-rae to three years in prison and slapped him with a 136.5 billion won ($112.4 million) fine for tax evasion and accounting fraud Friday.

The sentence was less than what the prosecution sought as the court dropped charges of embezzlement and breach of trust due to a lack of evidence.

The prosecution indicted Cho in 2014, alleging that the 80-year-old business tycoon misappropriated a combined 793.9 billion won in company assets through embezzlement, accounting fraud and tax evasion between 2003 and 2008.

While the chairman wasn’t put into custody due to bad health and old age but he may be imprisoned later.

“[Cho] was required to run the company with transparency in accordance with the law,” the judges said, “But Cho evaded taxes for a long time, which resulted in a serious blow to the fairness of our taxation system and negatively affected the perception of taxpayers.”

The court said that the amount of taxes Cho dodged amounted to 135.8 billion won. It did not acknowledge the 658.1 billion won that prosecutors said was amassed through embezzlement and constituted a breach of trust.

To evade taxes, Cho used shell companies and bank accounts under fake names and fraudulent accounting.

Hyosung Group, the machinery and construction conglomerate, said Cho will appeal to the Seoul High Court.

“Cho was trying to steer the company through the 1997 Asian financial crisis. His actions were not a pursuance of private interests,” the group said in a statement on Friday. “We will try to demonstrate this aspect in the appeal trial,” the group said.

A frail-looking Cho showed up at the court holding a cane and accompanied by company officials. He reportedly left the court 10 minutes after the trial ended.

The group’s president Cho Hyun-joon, who is the chairman’s eldest son, was also sentenced to 18 months in prison for embezzlement, although the sentence was suspended for three years. The 47-year-old must also serve 120 hours of community service.

The Chos are the latest business tycoons tried for financial crimes. Korea’s justice system often show leniency to high-profile figures by pardoning them or giving suspended jail terms, which are controversial.

Recently courts have been tougher.

CJ Chairman Lee Jay-hyun was sentenced to two and a half years in prison and slapped with a 25.2 billion won fine for tax evasion and embezzlement in a retrial in December, despite his deteriorating health conditions and constant appeals by business and political heavyweights for clemency.

But some business leaders managed to get lighter terms.

Former STX Group Chairman Kang Duk-soo and Woongjin Group Chairman Yoon Seok-keum were tried in 2015 and convicted of committing financial irregularities. The court handed down suspended three-year prison terms to both Kang and Yoon.

BY PARK EUN-JEE [park.eunjee@joongang.co.kr]

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