[Invest&Law] Imprisonment Confirmed for Financial Institution Employees in 'Saemaeul Geumgo Investment Corruption' Case

M Capital Vice President, Saemaeul Geumgo Employee Sentenced to Prison
"Using Ties with Former Saemaeul Geumgo Chairman Park Cha-hoon"

Financial company executives involved in the Saemaeul Geumgo 'Private Equity Fund (PEF) capital contribution corruption' case have been sentenced to prison terms.

According to the legal community on the 5th, the Supreme Court's 3rd Division (Presiding Justice Lee Heung-gu) recently dismissed the appeals of former M Capital Vice President Choi and former ST Leaders PEF CEO Choi, who were tried on charges including violation of the Act on the Aggravated Punishment of Specific Economic Crimes, and upheld the original sentences of imprisonment imposed on each of them.

A Saemaeul Geumgo branch in downtown Seoul. Photo by Yonhap News

Previously, former Vice President Choi was prosecuted on charges of receiving tens of billions of won in kickbacks from ST Leaders by arranging Saemaeul Geumgo funds from November 2019 to April last year.

Former Vice President Choi, who was a driver for former Saemaeul Geumgo Central Association Chairman Park Cha-hoon, worked at ST Leaders without financial practical experience and then served as vice president of M Capital. It was investigated that he used his personal connection with former Chairman Park to facilitate the attraction of about 300 billion won of Saemaeul Geumgo funds to ST Leaders. Former CEO Choi was also indicted on charges of providing money and valuables to executives and employees of Saemaeul Geumgo Central Association.

The first trial sentenced former Vice President Choi to four years in prison and ordered the payment of approximately 2.7 billion won in fines. The first trial court stated, "Using the influence of former Chairman Park as a background, he unjustly exploited the personal connections built with key personnel of Saemaeul Geumgo. Through this, he undermined the social trust in the fairness of duties performed by financial institution employees and the principle that 'public officials' duties cannot be bought with money,' thereby disrupting financial order." The court added, "He showed a planned attempt to evade tracking of profits through third-party account transfers and cash conversions."

Former CEO Choi was sentenced to one year and six months in prison. The court noted, "He conspired with former Vice President Choi to provide large sums of money and valuables to Mr. A, the team leader of the Corporate Finance Department at Saemaeul Geumgo Central Association, and in return, obtained massive management fees from investments by Saemaeul Geumgo." It further criticized, "Despite benefiting from corrupt acts occurring inside and outside leading domestic financial institutions, he has not shown remorse for the crimes."

In the appellate trial, former Vice President Choi's sentence was increased to four years and three months in prison. This was because some charges that were acquitted in the first trial were overturned to guilty. Former CEO Choi's appeal was dismissed. Both former Vice President Choi and former CEO Choi appealed the appellate court's decision, but the Supreme Court also upheld the appellate court's judgment.

Mr. A, who was indicted alongside them, withdrew his appeal ahead of the Supreme Court's decision in September, confirming the finalization of his five-year prison sentence and a fine of 150 million won imposed in the first and second trials. He was also ordered to pay 189 million won in fines.

Mr. A was charged with receiving several hundred million won in kickbacks by providing funds to ST Leaders and using gift certificates and corporate cards. The first trial court stated regarding Mr. A, "He received large sums of money from various clients, which is highly condemnable," and emphasized that "there remain many suspicions about the relationship among former Chairman Park, former Vice President Choi, and Mr. A, and heavy punishment commensurate with responsibility is necessary."

Meanwhile, former Chairman Park was prosecuted on charges of receiving about 260 million won in money and valuables from asset management companies and executives of Saemaeul Geumgo Central Association. He was sentenced to six years in prison and fined 200 million won in the first and second trials. He was also ordered to pay 172 million won in fines. Former Chairman Park has appealed and is awaiting the Supreme Court's judgment.