Hanwha chairman jailed

Kim Seung-youn gets 4-year prison term for embezzlement

Hanwha Group Chairman Kim Seung-youn enters the Seoul Western District Court to attend his trial, Thursday. (Photo : The Korea Times/Sohn Yong-seok)

Hanwha Group Chairman Kim Seung-youn was sentenced to four years in prison and fined 5.1 billion won ($4.5 million) Thursday for embezzlement and breach of trust.

Kim was imprisoned immediately after the Seoul Western District Court handed down the ruling. Hanwha officials said he will appeal.

Prosecutors in July demanded a nine-year prison term and a 150 billion won fine for the 60-year-old tycoon, claiming that he inflicted hundreds of billions of won in losses on the firm and its shareholders.

Kim was charged with having the group’s affiliates repay 320 billion won of debts of firms he owned under false names as well as embezzling company funds through accounting fraud between 2004 and 2006. He was also accused of evading taxes by engaging in stock transaction using false-name bank accounts.

Additionally he was charged with having Hanwha subsidiaries sell shares to his older sister at below-market prices.

“Evidence shows that Kim inflicted huge losses on Hanwha and its shareholders by engaging in multiple irregularities, including tax evasion and accounting fraud,” the court said. “He deserves stern punishment because he has shown no remorse for his crime.”

Two of Kim’s aides — Hong Dong-ok, CEO of Yeochun NCC, a Hanwha affiliate, and Kim Kwan-soo, CEO of Hanwha’s tourism unit — were also convicted of helping Kim misappropriate company funds. The court handed down a four-year prison term and a 1 billion won fine to Hong and a two-and-a-half-year prison sentence to Kim.

Chairman Kim claimed during hearings that he had nothing to do with the embezzlement, and that Hong orchestrated the crime. Hong was the top management administrator at the time.

“Considering the rigid corporate culture at Hanwha, where Chairman Kim is treated like a king, it is hard to believe that only Hong committed the crime,” the court said.

Kim’s case dates back to August 2010 when financial regulators asked the prosecution to launch a probe after finding that five false-name bank accounts were used for the misappropriation of company funds.

Prosecutors have since questioned more than 300 people and raided Hanwha offices in Seoul to secure evidence. Kim was first summoned for questioning in December that year and was interrogated two more times.

The verdict was initially planned for early this year, but the court delayed it, citing the transfer of a presiding judge in the case to another court. The hearing was resumed in July.

Kim was arrested and indicted in 2007 for hitting several men with steel pipes in revenge for a scuffle with his son at a bar. It was the first time that a conglomerate head was arrested on charges of violence.

He was granted a presidential pardon in 2008 along with other convicted tycoons, including Hyundai Motor Chairman Chung Mong-koo and SK Chairman Chey Tae-won. <The Korea Times/Na Jeong-ju>

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