‘Source Toll’ Not Guilty Nene Chicken Chairman, 8 Million KRW Criminal Compensation

Hyun Cheol-ho, chairman of Nene Chicken, who was indicted on charges of inserting a company under his son's name into the distribution process to impose so-called 'pass-through fees,' was acquitted and received criminal compensation.

Seoul Central District Court, Seocho-gu, Seoul. Photo by Jinhyung Kang aymsdream@

According to the official gazette on the 6th, the Seoul High Court Criminal Division 2 (Presiding Judges Seol Beom-sik, Lee Sang-ju, and Lee Won-seok) decided on the 15th of last month to pay Chairman Hyun 7,945,800 KRW as criminal compensation for expenses. Additionally, they ordered compensation of 7,969,600 KRW to be paid to Hyun Gwang-sik, Hyun's younger brother and CEO.

Criminal compensation is a system where the state compensates defendants who were prosecuted but later acquitted for damages caused by detention or trial, and the defendant must apply for it. The Hyun brothers applied for criminal compensation in March.

Previously, the Hyun brothers were prosecuted in 2020 on charges of causing 1.75 billion KRW in damages to the company by purchasing chicken sauce raw materials from Company A at prices up to 38% higher than market value between October 2015 and January 2019.

Investigations revealed that Company A was owned by Chairman Hyun's son. The prosecution's judgment was that the son's company was inserted midway in the transaction process to unfairly divert profits through so-called 'pass-through fee' transactions.

The first trial court accepted the prosecution's claims and sentenced the Hyun brothers to three years in prison with five years of probation each, along with a joint confiscation of 1.75 billion KRW.

However, the second trial court overturned the first trial's decision and acquitted them. The appellate court judged that it could not be definitively concluded that Nene Chicken suffered damages and rather found that the transaction through Company A prevented the external leakage of the sauce manufacturing method, resulting in benefits. The Supreme Court also confirmed the acquittal of the Hyun brothers in May of last year.