'Unfair Support, Embezzlement, Breach of Trust' Former Kumho Chairman Park Sam-gu Sentenced to 10 Years in Prison... Court Imprisonment

Former Kumho Asiana Chairman Park Sam-gu / Photo by Jin-Hyung Kang aymsdream@

[Asia Economy Reporter Kim Daehyun] Former Kumho Asiana Group Chairman Park Sam-gu, who was prosecuted on charges including unfair support to affiliates, embezzlement, and breach of trust, was sentenced to a heavy prison term and detained in court in the first trial.

On the afternoon of the 17th, the Seoul Central District Court Criminal Division 24 (Presiding Judge Jo Yongrae) sentenced former Chairman Park to 10 years in prison on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (embezzlement), which was the same sentence requested earlier by the prosecution.

The court stated, "Large corporate groups must comply with legal order as economic agents and fulfill their social responsibilities. This is the public's demand of the times," adding, "He used affiliate funds as if they were his personal assets, causing affiliate damages amounting to hundreds of billions of won. The opportunity to contain the damage was effectively lost during the concealment of the crime."

Former Chairman Park was prosecuted for embezzlement under the Specific Economic Crimes Act for withdrawing a total of 330 billion won from four Kumho Group affiliates, including Kumho Terminal, at the end of December 2015, and using it as payment to acquire shares of the group holding company Kumho Industrial (now Kumho Construction).

He is also charged with breach of trust under the Specific Economic Crimes Act for selling 100% of Kumho Terminal shares held by Asiana Airlines to Kumho Enterprise at a low price of 270 billion won in April 2016, and with violating the Fair Trade Act for lending a total of 130.6 billion won at low interest without collateral from August 2016 to April 2017 through nine Kumho Group affiliates, including Kumho Industrial, to Kumho Enterprise, which was facing financial difficulties.

Additionally, former Chairman Park was indicted for selling the exclusive in-flight meal business rights of Asiana Airlines to Swiss Gate Group at a low price of 133.3 billion won. The prosecution viewed this transaction as a quid pro quo, where Gate Group acquired 160 billion won worth of Kumho Enterprise’s new share subscription bonds (BW) interest-free.