Supreme Court Confirms Suspended Prison Sentence for HiteJinro President Park Tae-young in 'Bid Rigging' Case

Some Alleged Acts Could Not Be Punished by Law at the Time
Second Trial Acquittal Also Accepted by Supreme Court

Park Tae-young, president of HiteJinro, who was prosecuted for unfairly allocating work to affiliated companies owned by the family to facilitate illicit succession, has been confirmed to receive a suspended prison sentence. Park is the eldest son of Park Moon-duk, chairman of HiteJinro. Kim In-gyu, CEO of HiteJinro, who was also prosecuted together, was confirmed to receive a suspended sentence as well.

In some charges, although punishable under the current Fair Trade Act, the pre-amendment Fair Trade Act at the time of the acts did not punish instigators and only punished those who directly committed the acts, resulting in acquittal.

Park Tae-young, President of HiteJinro. [Photo by Yonhap News]

According to the legal community on the 3rd, the Supreme Court's First Division (Presiding Justice No Tae-ak) dismissed both the prosecution's and defendants' appeals in the final appeal of Park and others, who were indicted for violating the Fair Trade Act (abuse of trading position), confirming the original court ruling that sentenced Park to 1 year and 3 months in prison with a 2-year suspension and ordered 80 hours of community service.

Kim In-gyu, CEO of HiteJinro, who was indicted together, was confirmed to receive 8 months in prison with a 1-year suspension, and former executive director Kim Chang-gyu was confirmed to receive 4 months in prison with a 1-year suspension. HiteJinro as a corporation was fined 150 million won according to the joint liability provision.

The court explained the reason for dismissing the prosecution's appeal regarding the charge of "supporting transactions of aluminum coils for canned beer manufacturing," which was overturned from guilty in the first trial to not guilty in the second trial, stating, "There is no error in the lower court's judgment in that it did not violate the limits of free evaluation of evidence by failing to conduct necessary hearings as claimed in the grounds for appeal, nor did it misinterpret Article 23 Paragraph 1 of the Fair Trade Act or the legal principles concerning co-conspirators."

Regarding the grounds for appeal by Park and others, the court stated, "Claims that the lower court's sentencing judgment involved factual or legal errors or violated the principle of responsibility ultimately correspond to grounds for appeal on unfair sentencing," and added, "In this case, where a lighter sentence than death penalty, life imprisonment, or imprisonment for 10 years or more was imposed, claims that the sentence is too heavy and unfair do not constitute valid grounds for appeal," thus dismissing the appeal.

Park and others were indicted for unfairly allocating about 4 billion won worth of work by inserting Seoyoung E&T, an affiliate in which Park held the largest stake, into transactions with a draft beer equipment supplier acquired by Park during the manufacturing and distribution process of HiteJinro's beer cans from 2008 to 2017.

At the time of the offense, Article 23 (Prohibition of Unfair Trade Practices) Paragraph 1 of the Fair Trade Act stipulated that "a business operator shall not engage in acts that may hinder fair trade or cause an affiliate or another business operator to engage in such acts," enumerating in subparagraph 4 the prohibition of "using one's trading position unfairly in transactions with others."

This corresponds to the current Article 45 Paragraph 1 Subparagraph 6 of the Fair Trade Act.

Meanwhile, under the pre-amendment Fair Trade Act, Article 67 (Penalties) Subparagraph 2 stipulated that "a person who commits unfair trade practices in violation of Article 23 Paragraph 1" shall be punished by imprisonment of up to 2 years or a fine of up to 150 million won. In other words, Article 23 Paragraph 1 prohibited both directly committing unfair trade practices and instigating affiliates or others to commit such acts, but the penalty provision only included those who directly committed the unfair trade practices, excluding instigators.

However, the law was amended in August 2013 to include instigators as punishable persons. This point became a key issue in this case.

The prosecution viewed that they inserted Seoyoung E&T into transactions involving aluminum coils for canned beer manufacturing and container lids to receive so-called "pass-through fees" and unfairly supported HiteJinro's personnel.

The indictment also included allegations that indirect support was provided by increasing subcontracting fees to enable Seoyoung E&T to advantageously sell shares of its subsidiary Seohae Insight.

The first trial court recognized guilt in three of the four charges?supporting HiteJinro personnel, supporting aluminum coil transactions for canned beer manufacturing, and supporting Glasslock cap transactions?excluding the charge related to supporting the sale of Seohae Insight. Park was sentenced to 1 year and 6 months in prison with a 2-year suspension, CEO Kim to 10 months in prison with a 1-year suspension, and former executive director Kim to 4 months in prison with a 1-year suspension. HiteJinro as a corporation was fined 200 million won.

However, the second trial court overturned the guilty verdict on the aluminum coil-related charge and acquitted them. Park's sentence was reduced to 1 year and 3 months in prison with a 2-year suspension, CEO Kim's to 8 months in prison with a 1-year suspension, and the corporate fine was reduced to 150 million won.

As noted earlier, this was because the Fair Trade Act at the time only punished those who directly committed the acts and did not include instigators in the penalty provisions.

The court pointed out, "If a business operator causes an affiliate or another business operator to commit abuse of trading position rather than directly committing it themselves, it constitutes a violation of the prohibition under Article 23 Paragraph 1 Subparagraph 4 of the Fair Trade Act and may be subject to separate sanctions such as surcharges under the Fair Trade Act, but it should not be considered subject to criminal punishment under Article 67 Subparagraph 2 of the same Act."

It further explained, "In this case, since Park and CEO Kim did not sequentially conspire to unfairly support Seoyoung E&T but rather instructed Samkwang Glass to unfairly support Seoyoung E&T, they cannot be subject to criminal punishment," thus acquitting them.

The prosecution appealed, but the Supreme Court also found no problem with the second trial court's judgment.