Hyundai Chairman to Face Resentencing for Embezzlement Conviction

Hyundai-Kia Automotive Group Chairman and CEO Chung Mong-koo has a June 3 date with the Seoul High Court for resentencing of his conviction last year for fraud and breach of trust.

Chung on Tuesday faced the tribunal of judges who will decide the new sentence for a hearing on the matter, during which state prosecutors demanded a new, 6-year prison term.

Chung, 70, originally was sentenced to a 3-year jail term in February 2007 after being convicted of embezzling some 90 billion won ($86 million), creating an illegal slush fund amounting to 103.4 billion won ($99 million) and breach of fiduciary responsibility involving some Hyundai affiliated companies.

The sentence was quashed and changed to a 5-year suspended sentence last September by Appeals Court Chief Judge Lee Jae-Hong, who ordered Chung to make restitution through community service. Lee said at the time Chung was too important to the nation’s economy to go to prison.

However, the Supreme Court of Korea ruled on April 17 the suspended sentence was improper and the Hyundai chief must be retried.

“Under the current criminal law, community service is defined as work or labor-intensive activities that can be imposed by the hour for up to 500 hours,” the Supreme Court said in its ruling. “According to the law, the conditions and procedures of community service should not be expanded or interpreted at one’s discretion.”

Chung Mong-koo

Chung told the judges Tuesday, “I’ve been in deep reflection about my conduct, and I apologize to the Korean people. If I am given leniency, I’ll do my best to form the Hyundai-Kia Automotive Group into one of the world’s best car companies.”

Hyundai spokesman Jake Jeong, who was present in court, says Chung also said he intends to keep his previous promise to donate substantial personal funds to various Korean charities as repentance.

Chung’s lawyer told the judges the Hyundai chief plans to donate 70 billion won ($67 million) each year over the next 12 years to the Haevichi Cultural Foundation, which was set up to select charities and disburse the funds. Chung already has donated 60 billion won ($57.3 million) to the foundation, the lawyer says.

The lawyer also told the judges Hyundai Motor saw high sales and earnings figures in this year’s first quarter and that Chung was instrumental last year in winning the 2012 World Expo for the city of Yeosu.

Jeong tells Ward’s he thinks the Seoul High Court might alter the terms of Chung’s community service but will not change the 5-year suspension.

Under the suspended sentence, Chung is required to donate funds to charity and to make lectures to Korean business people and promote corporate transparency. He also must write articles about his crimes and his repentance for the edification of other executives.

Prosecutors have argued the terms are improper and unprecedented in Korean law and that the current sentence is too lenient.

Being re-examined in the same court Tuesday was Hyundai group’s No.2 official, Co- Chairman Kim Dong-jin, who also received a suspended sentence last year for his part in the Chung embezzlement and slush-fund case.

Kim’s suspended sentence is not in question. Rather, he was re-examined in a different case involving bribe money given to the president of an agricultural cooperative organization.

Kim allegedly paid a 300 million won ($287,000) bribe to the former chairman of the National Agricultural Cooperative Federation during negotiations leading to Hyundai group’s purchase of its present world headquarters building in Seoul from the cooperative at a fire-sale price.

The former cooperative chairman allegedly has returned the money, and prosecutors are seeking to confiscate the same amount from the Hyundai group. The court will make a ruling on the Kim Dong-jin case on June 3, as well.