Additional Crimes Committed During Probation Period
Convicted for Lending 5 Billion Won to Acquaintance's Company and Misusing Corporate Card
Acquitted of 13.1 Billion Won Breach of Trust and Favoritism Charges
Cho Hyunbeom, Chairman of Korea&Company, who was put on trial on charges of embezzlement and breach of trust involving over 20 billion won, was sentenced to three years in prison and taken into custody following the first trial verdict.
On the 29th, the 23rd Criminal Division of the Seoul Central District Court (Presiding Judge Oh Seyong) sentenced Chairman Cho to a total of three years in prison on charges of embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes. In November 2020, Chairman Cho had previously been sentenced to three years in prison, suspended for four years, on separate charges of breach of trust and was still within the probation period. Accordingly, the court sentenced him to six months for the crimes committed before the previous final verdict, taking into account what the sentence would have been if ruled together at the time, and two years and six months for the offenses committed after the final verdict.
The court found Chairman Cho guilty of several charges, including lending 5 billion won of company funds to a company run by an acquaintance for personal purposes without reasonable or sufficient measures to recover the debt, and allowing a third party to use the company’s corporate card for personal purposes. He was also found guilty of breach of trust for causing financial damage to the company by assigning a chauffeur to exclusively serve his spouse, purchasing or leasing five vehicles for personal use under the company’s name, using company funds to pay for personal moving and furniture expenses, taking two pieces of company-owned furniture to his residence for personal use (embezzlement), and providing financial benefits to a third party after receiving an improper request to favor a travel agency (bribery).
However, regarding the allegation that he unfairly supported the affiliate Korea Precision Works (MKT) by purchasing tire molds at higher prices than competitors, the court acquitted him, stating, "It cannot be said that the transactions were conducted on particularly favorable terms." The court added, "The purpose of introducing the 'new price table' applied to tire transactions with MKT was legitimate, and the method of calculation was reasonable, so the price level cannot be considered excessive," and "There is no evidence that the pricing method was unfairly distorted in favor of MKT."
The court stated, "The defendant abused his status as a member of the owner family to commit these crimes, which are grave in nature and of poor quality," and "It is an aggravating factor that he committed similar offenses using similar methods while under a suspended sentence for similar crimes." However, the court also noted, "It is a mitigating factor that measures were taken to strengthen the companies’ compliance control systems and ensure effective oversight, that he confessed and showed remorse regarding the breach of trust involving the use of corporate cards, and that the damages have been substantially recovered."
Chairman Cho was indicted in March 2023 on charges of unfairly supporting the affiliate Korea Precision Works (MKT) by purchasing approximately 87.5 billion won worth of tire molds from MKT at higher prices than other manufacturers between February 2014 and December 2017. MKT is a company in which Korea Tire, Chairman Cho, his brother, and others from the owner family hold most of the shares. As a result, Korea Tire suffered approximately 13.1 billion won in damages. Prosecutors believe the profits funneled to MKT ultimately benefited Chairman Cho and the owner family. Chairman Cho also faces charges of embezzling and committing breach of trust involving approximately 7.55 billion won of company funds between 2017 and 2022. Immediately after the sentencing, Chairman Cho briefly stated, "I am deeply reflecting on my actions."
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