For the second time in a year, Hyundai-Kia Automotive Group Chairman Chung Mong-koo and former Hyundai Motor Vice Chairman Kim Dong-jin have been severely fined by a Seoul court for allegedly breaching their managerial duties.
On Wednesday, the Seoul Central District Court ordered the two executives to pay a total of 82.6 billion won ($73.1 million) to Hyundai Motor. Chung was ordered to pay 74.6 billion won ($66 million) and Kim, 8 billion won ($ 7.1 million).
The ruling was made in relation to a case filed in 2008 against Chung and Kim by civic group Solidarity for Economic Reform and a group of minority shareholders.
Kim left his post as Hyundai Motor vice chairman and co-CEO to become vice chairman of Hyundai Mobis, the group’s automotive parts and systems arm, in September 2008, the same year the suit was filed.
The suit alleges Chung and Kim deprived Hyundai Motor of potential profits by showing favoritism to affiliates within the group at the expense of the auto maker. It claims Chung and Kim permitted Hyundai Mobis to overcharge Hyundai Motor for parts and allowed affiliate Glovis to overcharge Hyundai Motor for shipping fees.
Additionally, the suit claims Hyundai Motor helped pay debts owed to Hyundai Mobis by Kia Motors.
It is the second time the Seoul Central District Court has ruled against Chung and Kim in a suit brought by the same plaintiffs. In February 2010, Chung and Kim were ordered to pay 70 billion won ($60 million) to Hyundai Motor.
In that case, the court found that the defendants in 2001 caused Hyundai Motor to participate in supporting a stock issue involving Hyundai Aerospace and steel company Hyundai Hysco, and that the action diminished Hyundai’s profitability. Kim previously served as CEO of Hyundai Aerospace before joining Hyundai Motor.
Hyundai Motor would not comment on the ruling. Asked if the defendants had paid the $60 million to Hyundai Motor previously ordered by the court in 2010, a spokesman tells Ward’s Chung has not.
