Bribery, Violation of the Act on the Aggravated Punishment of Specific Crimes, Foreign Exchange Transactions Act, and Evidence Tampering Conspiracy
Most Charges Found Guilty
Lee Hwa-young's Side "Cannot Accept Court and Verdict, Immediate Appeal"
Lee Hwa-young, former Deputy Governor for Peace of Gyeonggi Province, who has been on trial for involvement in allegations of illicit remittances to North Korea, including the claim that the Ssangbangwool Group covered the costs of Lee Jae-myung, leader of the Democratic Party of Korea's visit to North Korea, has been sentenced to a heavy punishment.
In particular, as the judiciary recognized that the Ssangbangwool Group covered the costs of Lee Jae-myung's visit to North Korea, it is expected that the prosecution will soon take legal action against Lee Jae-myung, who has been investigated as an accomplice.
On the 7th, the Criminal Division 11 of Suwon District Court (Presiding Judge Shin Jin-woo) delivered a first-instance verdict for Lee, who was detained and indicted on charges including violation of the Foreign Exchange Transactions Act, violation of the Act on the Aggravated Punishment of Specific Crimes (bribery), violation of the Political Funds Act, and obstruction of evidence. The court found most of Lee's charges guilty and sentenced him to 9 years and 6 months in prison and a fine of 250 million KRW. Additionally, it ordered the confiscation of 325.95 million KRW.
On that day, the court separately sentenced Lee to 1 year and 6 months in prison for violating the Political Funds Act, and for the remaining charges including bribery under the Act on the Aggravated Punishment of Specific Crimes, violation of the Foreign Exchange Transactions Act, and obstruction of evidence, sentenced him to 8 years in prison, a fine of 250 million KRW, and confiscation of 325.95 million KRW. According to criminal law, when multiple crimes are committed simultaneously, the heaviest sentence can be increased by up to half and imposed as a single sentence. However, Article 18, Paragraph 3 of the Public Official Election Act provides an exception, requiring separate sentencing for election crimes or political fund-related offenses such as illegal receipt of political funds.
Meanwhile, the court acquitted Lee of some charges, including violation of the Foreign Exchange Transactions Act related to unauthorized payments for smart farm costs. However, since other charges are recognized as either ideal concurrence (one act constituting multiple crimes) or a single crime relationship (several acts constituting one crime under comprehensive or legal concurrence), the court decided not to issue separate acquittals.
Regarding sentencing, the court pointed out, "The defendant’s acts of receiving bribes and political funds for a long period without any sense of wrongdoing are of poor quality, especially as a senior public official with considerable political experience, who has betrayed the ongoing efforts over decades in our society to sever collusive ties between influential politicians and private companies."
Furthermore, the court stated, "While conducting exchange and cooperation projects with North Korea, one must proceed cautiously within the bounds of the law. However, the defendant abused his official position to forcibly mobilize private companies and recklessly paid large sums to North Korea through covert methods, causing diplomatic and security issues. Even if the policy goal was to promote inter-Korean exchange and cooperation projects, the blameworthiness is high."
The court added, "The defendant denied all offenses from the investigation stage to the courtroom and consistently offered irrational excuses, making severe punishment inevitable," explaining the reason for the heavy sentence.
Lee was detained and indicted in October 2022 on charges of receiving bribes and illegal political funds amounting to hundreds of millions of won by using corporate cards and vehicles provided by the Ssangbangwool Group from July 2018 to July 2022, and by paying false salaries to his aides.
During the trial, in March last year, he was additionally indicted on charges of asking former Ssangbangwool Chairman Kim Sung-tae to cover a total of 8 million USD, including 5 million USD for the smart farm project costs promised by Gyeonggi Province to North Korea and 3 million USD for Lee Jae-myung’s visit expenses.
One month later, in April last year, he was further indicted for requesting Ssangbangwool Vice Chairman Bang Yong-chul to delete data related to his use of corporate cards ahead of the prosecution’s investigation.
First, regarding the bribery charges, the court found Lee guilty of receiving bribes amounting to about 107 million KRW by using corporate cards provided by former Ssangbangwool Vice Chairman Bang Yong-chul and others during his tenure as Deputy Governor for Peace of Gyeonggi Province, or by having his aide Moon pay false salaries.
The court stated, "Although the defendant denied the charges, the testimonies of Bang Yong-chul, Kim Sung-tae, and several Ssangbangwool employees, along with credit card usage records and internal documents from Gyeonggi Province, confirm Lee Hwa-young’s bribery."
However, the court acquitted Lee of bribery charges related to receiving corporate cards and vehicles while serving as CEO of KINTEX, citing lack of 'duty-relatedness,' a requirement for bribery.
Regarding violations of the Political Funds Act, the court found Lee guilty of illegally receiving political funds amounting to about 218.3 million KRW by using corporate cards and vehicles provided by former Vice Chairman Bang and others, or by having aide Moon pay false salaries.
Similar to the bribery charges, the court recognized Lee’s guilt based on testimonies from Bang and Ssangbangwool employees, credit card usage records, and vehicle entry and exit logs.
However, the court acquitted Lee of charges related to receiving some corporate cards before his appointment as Deputy Governor for Peace, reasoning that he was not yet a 'person engaged in political activities' under the Political Funds Act, and thus the funds could not be considered for political activities.
Recognition of Ssangbangwool covering Lee Jae-myung’s North Korea visit costs... Prosecution likely to indict Lee soon
The court also recognized some guilt regarding the charges related to illegal remittances to North Korea (violation of the Foreign Exchange Transactions Act), for which Lee Jae-myung is being investigated as an accomplice.
First, the court found Lee guilty of conspiring with former Vice Chairman Bang and others to mobilize Ssangbangwool employees to export a total of approximately 1.64 million USD abroad without reporting to the customs authorities, intending to cover smart farm costs for Gyeonggi Province.
The court cited testimonies from Bang and Ssangbangwool employees, National Intelligence Service documents, internal Gyeonggi Province reports, and meeting minutes prepared by Kim as evidence supporting Lee’s violation of the Foreign Exchange Transactions Act.
However, the court acquitted Lee of the charge that he exported 1.8 million yuan abroad via a hawala method, ruling it did not constitute 'carrying payment instruments abroad.' Also, the court acquitted him of the charge of conspiring with Bang to pay a total of 5 million USD to the Workers' Party of Korea, a financial sanctions target, reasoning that there was no evidence he paid or intended to pay the Workers' Party.
Conversely, the court found Lee guilty of conspiring with Bang and others to mobilize Ssangbangwool employees to export approximately 2.3 million USD abroad without reporting to customs, covering the costs of Lee Jae-myung’s North Korea visit when he was Governor of Gyeonggi Province, and of paying about 2 million USD to the Workers' Party of Korea without approval from the Bank of Korea Governor.
The court stated that testimonies from Bang, Ssangbangwool employees, former Gyeonggi Province official Park, official documents from Gyeonggi Province, notes from former Director Shin of the Peace Cooperation Bureau, and receipts prepared by North Korean Song proved Lee’s violation of the Foreign Exchange Transactions Act.
However, the court acquitted Lee of charges of exporting 700,000 USD abroad via hawala, and of conspiring with Bang to pay 1 million USD to the Workers' Party through Lee Mo, ruling these did not constitute carrying payment instruments abroad or intentional payment to the Workers' Party.
Finally, the court recognized Lee’s guilt for instructing evidence destruction.
He was found guilty of conspiring with Kim and others to instruct Ssangbangwool employees to destroy evidence related to his charges by shredding and replacing internal PC hard drives.
The court based its judgment on testimonies from Kim, Bang, and Ssangbangwool employees, criminal rulings of related persons previously tried for evidence destruction, and call records.
The court’s recognition of Lee’s guilt in covering Lee Jae-myung’s North Korea visit costs through Ssangbangwool is expected to have a decisive impact on the prosecution’s indictment of Lee Jae-myung and the court’s future judgment on his guilt.
Earlier, at a bail hearing on the 21st of last month, Lee’s defense attorney stated, "Although Lee Jae-myung has not been indicted as a co-defendant with Lee Hwa-young in the North Korea remittance case, the indictment states that Lee Jae-myung, currently the opposition leader, is named as an accomplice," and added, "A guilty verdict against Lee Hwa-young will inevitably serve as a strong judicial document presuming Lee Jae-myung’s guilt in the future."
The defense also pressured the court, saying, "Lee Jae-myung is expected to run for the presidential election. If a guilty verdict is issued, the court must clearly explain the reasons for attributing guilt to Lee Jae-myung, who is named as an accomplice with Lee Hwa-young."
Following the court’s acceptance of former Chairman Kim’s testimony and finding some of Lee’s charges related to remittances to North Korea guilty, the Democratic Party, which proposed the 'Special Prosecutor Act for Truth Investigation into the Prosecution’s False Testimony Coercion in the Kim Sung-tae North Korea Remittance Case' on the 3rd, four days before Lee’s first-instance sentencing, is expected to lose momentum in pushing for the special prosecutor law.
Meanwhile, the court sentenced former Ssangbangwool Vice Chairman Bang Yong-chul, who was tried alongside Lee, to 2 years in prison after finding him guilty of violating the Political Funds Act and bribery. However, the court acquitted him of charges related to unauthorized payments for smart farm costs violating the Foreign Exchange Transactions Act and obstruction of evidence in October 2021.
Lee Hwa-young’s side: "Cannot accept the verdict, court’s recognition is flawed" ... "Will immediately appeal"
Lee Hwa-young’s defense attorney expressed to reporters immediately after the verdict that they intend to appeal promptly. Attorney Kim Hyun-chul said, "The court judged that 'Ssangbangwool started North Korea business because of Lee Hwa-young, and Lee influenced Ssangbangwool’s North Korea business,' which is very wrong," and criticized, "The court selectively chose evidence in a biased manner."
Attorney Kim Kwang-min also raised his voice. He said, "This verdict is based on fundamentally incorrect facts," and added, "How can a trial be fair and just when it presumes that Kim Sung-tae, who was previously investigated and punished for stock manipulation, was a CEO of a sound mid-sized company?"
He continued, "Based on that premise, Lee Hwa-young was sentenced to nearly 10 years. We cannot accept the verdict and cannot recognize the court itself."
Prosecution: "Court ruling confirms the reality of illegal remittances to North Korea" ... Will appeal
The prosecution evaluated that the first-instance ruling on Lee Hwa-young clearly confirmed the reality of illegal remittances to North Korea, for which Lee Jae-myung is being investigated as an accomplice.
The prosecution pointed out that although the court recognized the reality of the remittances, it acquitted some charges and sentenced Lee to 8 years in prison, which is lower than the statutory minimum of 10 years despite the bribery amount exceeding 100 million KRW. They expressed their intention to appeal the first-instance ruling that sentenced Lee to 9 years and 6 months in prison and a fine of 250 million KRW.
In a statement released after the court sentenced Lee to a heavy punishment recognizing most charges as guilty, the Suwon District Prosecutors’ Office said, "The court accepted the prosecution’s claims on most charges, including bribery of 107 million KRW from Ssangbangwool Group, illegal political funds of 218 million KRW, violation of the Foreign Exchange Transactions Act due to illegal remittances to North Korea, and obstruction of evidence, and sentenced the defendant guilty."
They added, "Through today’s ruling, it is clearly confirmed that Lee Hwa-young, as Deputy Governor for Peace of Gyeonggi Province, committed the crimes during the promotion of Gyeonggi Province’s North Korea projects, delivering a total of 8 million USD of Ssangbangwool funds to North Korea under the pretext of covering 5 million USD for the smart farm project and 3 million USD for then-Governor Lee Jae-myung’s North Korea visit."
The Suwon Prosecutors’ Office stated, "The so-called 'Ssangbangwool stock manipulation for North Korea remittance' claims repeatedly raised by Lee Hwa-young, his defense, some media, and political parties until just before the verdict have been proven false," and detailed the court’s reasoning, including: Ssangbangwool’s process of promoting North Korea business, the introduction of An Bu-su by Lee Hwa-young, the use of the term 'contract payment' in Nanos IR materials which could not explicitly state the remittance, the fact that Ssangbangwool was not at the stage of paying contract fees, the implausibility of Lee’s claim that Kim Sung-tae recklessly deceived overseas investors to raise stock prices, and that Ri Ho-nam’s use of Ssangbangwool to make money was a private internal operation unrelated to Ssangbangwool’s sincerity in promoting North Korea business.
At the sentencing hearing on April 8, the prosecution had requested 15 years in prison and a fine of 1 billion KRW for Lee. They have now expressed their intention to appeal.
At that time, the prosecution requested 12 years in prison and a fine of 1 billion KRW with confiscation of about 334 million KRW for bribery and violations of the Political Funds Act, and 3 years in prison for violations of the Foreign Exchange Transactions Act and obstruction of evidence.
The Suwon Prosecutors’ Office said, "However, regarding sentencing, although the bribery amount exceeded 100 million KRW, the court sentenced 8 years in prison, which is below the statutory minimum of 10 years, and acquitted some charges related to procedural aspects of foreign exchange transactions. We plan to file an appeal after reviewing the verdict."
They added, "In particular, the court recognized the reality of illegal remittances of 8 million USD delivered to North Korea through smuggling, acknowledged the violation of the Foreign Exchange Transactions Act due to smuggling, and recognized the delivery to North Korean officials. However, it acquitted some charges related to delivery to the Workers' Party of Korea, a financial sanctions target, which we will correct in the appellate court."
Finally, the Suwon Prosecutors’ Office stated, "Going forward, the Suwon Prosecutors’ Office investigation team will clarify the substantive truth through remaining investigations and trials based solely on evidence and law regarding illegal remittances to North Korea and hold those responsible strictly accountable."
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