S. Korean tycoon jailed for embezzlement

Agence France-Presse

Posted at Aug 16 2012 02:53 PM | Updated as of Aug 16 2012 10:53 PM

SEOUL - The head of one of South Korea's biggest business groups was sentenced to four years in prison on Thursday for diverting company funds to repay the debts of firms he had run under false names.

The Seoul Western District Court ordered Hanwha Group chairman Kim Seung-Youn to be jailed immediately, even though a group spokesman said he would appeal.

The move was rare in South Korea, where offending tycoons typically receive suspended prison terms on the grounds that their companies are crucial to the economy.

"Chairman Kim incurred losses to the company by taking advantage of his influence as the Hanwha Group's major shareholder," the court said in a statement.

"He has not even shown remorse for all the criminal acts."

Kim was also fined 5.1 billion won ($4.5 million). Prosecutors had demanded a nine-year sentence and 150 billion won in fines for the 60-year-old tycoon.

The tycoon was convicted of arranging for group subsidiaries illegally to support his own private companies by providing them with financial guarantees and illicit funds between 2004 and 2006.

The move caused losses worth 288 billion won to the subsidiaries.

Kim was also convicted of having the subsidiaries sell shares to his relatives at below-market prices in 2005, a move which caused 14 billion won in losses to the subsidiaries and their shareholders.

The court also ordered four years' imprisonment and one billion won in fines for a Hanwha Group official and handed down 30 months in prison for the CEO of a group subsidiary -- both for helping divert company funds.

In July 2007 Kim was convicted of a gangland-style revenge attack on bar employees after his son sustained injuries in a bar brawl. He was sentenced to 18 months in prison but in September that year the sentence was suspended.

Hanwha is the country's 14th largest business conglomerate, with 53 subsidiaries including manufacturing, construction and finance companies.

In May this year it signed what it called the largest-ever overseas construction deal for a South Korean company -- a $7.75 billion agreement to build 100,000 homes on the outskirts of the Iraqi capital Baghdad.

© 1994-2012 Agence France-Presse