Hyosung Group chairman Cho Seok-rae was sentenced to three years in prison and a 136.5 billion won ($113 million) fine by the Seoul Central District Court on Friday on charges of tax evasion and accounting fraud.
Cho, 81, who showed up at the court holding a cane and assisted by company officials, was found guilty of evading 135.8 billion won in taxes. He was exempted from immediate detention given his old age and deteriorating health.
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| Hyosung Group chairman Cho Seok-rae shows up at the Seoul Central District Court to attend his hearing on Friday. (Yonhap) |
“Though responsible for transparent and lawful management of his company, chairman Cho evaded tax duties worth some 130 billion won for a prolonged period. Considering his social position, his breach of trust and wrongdoings weigh heavily,” judges ruled.
“Considering the group’s operational structure, we found that the group systematically committed accounting fraud,” the ruling read.
Hyosung Group released a statement expressing regret at the court decision, saying “such actions were inevitably taken during the 1997 Asian financial crisis to save the faltering company and that the chairman did not pursue any private interests.”
The group plans to file an appeal and make continued efforts to explain its position to the judges, according to the statement.
The Friday ruling comes two years after the Hyosung chairman was indicted in January 2014, on suspicions of misappropriating some 793.9 billion won in company assets from 2003-2008.
The prosecution had sought a 10-year jail term and 300 billion won in fines, alleging that the 80-year-old tycoon established several paper companies, evaded taxes by manipulated company checkbooks and formed slush funds and accounts under borrowed names.
Cho and Hyosung Group had asserted that the chairman’s moves “were an inevitable choice that had to be made to save the company and its employees during the 1997 financial crisis.”
“Chairman Cho did not seek personal gains but rather helped Hyosung grow into a global company and raise its market value,” the group had said, asking the court to consider situational factors in evaluating the case.
In the Friday ruling, judges found Cho guilty of tax evasion, but cleared him of other charges including embezzlement and corporate malpractice.
Alongside the Hyosung chairman, the group’s president Cho Hyun-joon, the chairman’s eldest son, was sentenced to a 1.5-year prison term, three years of probation and 120 hours of volunteer service.
Much attention had been focused on the severity of the Friday ruling, given state authorities have been stepping up their crackdown on the nation’s business tycoons, often criticized for receiving preferential treatments in conducting business.
Last month, the Seoul High Court sentenced the chairman of Korean food and entertainment giant CJ Group to a 2.5-year prison term and a 25.2 billion won fine for embezzlement, breach of conduct and tax evasion.
By Sohn Ji-young (jys@heraldcorp.com)
