SPC Chairman Heo Young-in, Accused of 'Stock Undervaluation Transfer,' Also Acquitted in Second Trial

SPC Group Chairman Huh Young-in, who was prosecuted on charges of instructing the sale of affiliate company stocks at a low price to evade gift tax, was acquitted again in the second trial.

Chairman Heo Young-in of SPC Group. [Image source=Yonhap News]

The Seoul High Court Criminal Division 1-1 (Presiding Judges Han Chang-hoon, Kim Woo-jin, Ma Yong-joo) on the 6th acquitted Chairman Huh, who was indicted for breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, as in the first trial. Former SPC Group General Manager Cho Sang-ho and SPC CEO Hwang Jae-bok, who were also prosecuted together, were all found not guilty.

The court stated, “There are suspicious circumstances as the valuation method for Mildaoneun’s stock price was significantly lower than the original acquisition price,” but added, “It is difficult to judge that the valuation method for Mildaoneun’s stock, which did not apply the presumed profit method claimed by the prosecution, is illegal.” Furthermore, “Although there is a circumstance that SPC conducted this before the implementation of gift tax on internal transactions, it is difficult to conclude that the valuation method for Mildaoneun’s stock is illegal, so it is also difficult to see it as breach of trust.”

Earlier, Chairman Huh and others were indicted on charges of instructing the sale of Mildaoneun (SPC Group’s flour production affiliate) stocks held by Paris Croissant and Shani in December 2012 at a significantly lower price of 255 won than the acquisition price (3,038 won in 2008) or the previous year’s valuation (1,180 won). The prosecution’s estimated appropriate price was 1,595 won.

The prosecution judged that Chairman Huh sold the stocks at a low price to evade the ‘internal transaction’ gift tax introduced in January of that year. Through this, Shani suffered a loss of 5.81 billion won, Paris Croissant 12.16 billion won, while Samlip reportedly gained 17.97 billion won.

However, the first trial court acquitted in February, stating that it could not recognize any problem with SPC Group’s method of valuing Mildaoneun’s stocks or any improper intervention by the company in the valuation process.