Acquitted of Embezzlement and Breach of Trust Under the Special Act
Court Points Out "Direct Violation of the Fair Trade Act"
Park Samgu, former chairman of Kumho Asiana Group, who was indicted for unfairly supporting his private company by mobilizing group affiliates and embezzling company funds totaling over 300 billion won, was sentenced to a suspended prison term in his second trial. The first trial had sentenced him to 10 years in prison, but the appellate court significantly reduced the sentence.
On September 18, the Seoul High Court's Criminal Division 2 (Presiding Judge Kim Joungho) held the appellate sentencing hearing for Park, who was charged with embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes, and overturned the first trial's 10-year prison sentence, instead sentencing him to two years and six months in prison, suspended for two years. Unlike the first trial, which found most of the charges guilty, the appellate court acquitted him of embezzlement and breach of trust under the Special Act, which carry heavier penalties.
The court stated that, regarding the acquisition of Kumho Industrial shares, it was difficult to conclude that Park intended to dispose of the victim companies' funds as if they were his own, and that it was also difficult to see that Asiana Airlines suffered losses due to the undervalued sale of Kumho Terminal shares. Regarding the breach of trust charge related to the transfer of the in-flight meal business rights, the court said, "It cannot be concluded that Asiana Airlines suffered such losses due to the defendants' actions, so the damages claimed in the main and alternative charges are not recognized," thus finding him not guilty.
However, the court found him guilty of violating the Fair Trade Act in connection with financial transactions among Kumho Group affiliates and the acquisition of Kumho Enterprise’s bonds with warrants (BW) by a Swiss Gate Group affiliate.
The court explained its sentencing by stating, "The defendant led the crimes and directly and substantially benefited from them. The creditors, including Korea Development Bank, also agreed to Park Samgu regaining control over Kumho Group, which was taken into consideration."
However, the court also pointed out, "This crime was committed for the purpose of recovering, maintaining, and strengthening the defendant’s control over Kumho Group, which is a direct violation of the intent of the Fair Trade Act. The crime was organized and premeditated, and involved large-scale unfair support and provision of unjust benefits, making the defendant’s culpability severe."
The executives and employees who were tried alongside Park also received reduced sentences on appeal. Of the three, two were each sentenced to one year in prison suspended for two years and one year and six months in prison suspended for three years, while one was acquitted. Kumho Construction (formerly Kumho Industrial) was fined 200 million won, the same as in the first trial.
Park is accused of withdrawing 330 billion won from four affiliates, including Kumho Terminal, in December 2015 to use as payment for acquiring Kumho Industrial shares held by creditors such as Korea Development Bank, and in April of the following year, selling 100% of Kumho Terminal shares owned by Asiana Airlines to Kumho Enterprise at an undervalued price. In December 2016, he also allegedly sold Asiana Airlines’ exclusive in-flight meal business rights to Swiss Gate Group for 133.3 billion won at an undervalued price, and in return, arranged for Gate Group to acquire 160 billion won worth of Kumho Enterprise’s bonds with warrants (BW) interest-free.
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