Chairman Cho Hyunbeom of Hankook & Company Has Prison Sentence Reduced from 3 to 2 Years in Appeal for Embezzlement and Breach of Trust Charges

Some Breach of Trust Charges Acquitted
"Return to Management Inappropriate for Corporate Culture Improvement Despite Risks of Leadership Vacuum"
Two Handwritten Letters of Reflection Deemed "Sincere"

Cho Hyunbeom, chairman of Hankook & Company, who was put on trial on charges including embezzlement and breach of trust amounting to around 20 billion won, received a reduced sentence of two years in prison in the appellate court.

Cho Hyunbeom, chairman of Hankook & Company, who is suspected of unfair support and embezzlement and breach of trust involving affiliates, is attending the continued trial held at the Seoul Central District Court in Seocho-gu, Seoul on the 11th. Photo by Kang Jinhyung aymsdream@

The 13th Criminal Division of the Seoul High Court (Presiding Judge Baek Kangjin) overturned the original verdict, which had sentenced Chairman Cho to three years in prison for embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, and instead sentenced him to two years in prison.

Previously, in November 2020, Chairman Cho had received a final sentence of three years in prison, suspended for four years, for charges including breach of trust and bribery. The court therefore divided the sentencing between crimes committed before and after the confirmation of that ruling. For certain breach of trust charges committed before the previous verdict, the court maintained the original sentence of six months in prison. For the remaining charges committed after the previous ruling, the sentence was reduced from two years and six months in the first trial to one year and six months in the appellate court.

Chairman Cho was indicted in March 2023 on charges of providing unfair support by having Hankook Tire purchase tire molds worth approximately 87.5 billion won from the affiliate Hankook Precision Works (MKT) between February 2014 and December 2017 at prices higher than those charged by other manufacturers. MKT is a company in which Chairman Cho, his brother, and other family members hold most of the shares. Through this process, Hankook Tire suffered a loss of about 13.1 billion won. Prosecutors believe that the profits funneled to MKT by Hankook Tire ultimately benefited Chairman Cho and his family. Chairman Cho also faces charges of embezzling and misappropriating approximately 7.55 billion won in company funds between 2017 and 2022.

The court, however, found Chairman Cho not guilty of the charge that MKT lent 5 billion won to Hyundai Motor’s partner company, Rihan, without collateral. While the court acknowledged that prioritizing a personal relationship with the representative was not in line with sound business judgment, it determined that, considering various circumstances, the lack of sufficient prior review could not be deemed a 'procedural flaw.'

The court reached the same conclusions as the first trial regarding the remaining charges.

The court stated, "Chairman Cho exercised significant influence not only within his own group but also over other companies, and it is clear that he disregarded proper procedures in pursuit of illicit gains. Given the high standard of legal compliance and public interest expected of corporate leaders, even if there are risks associated with a management vacuum, allowing an executive who blatantly pursued personal gain to return to the front lines would negatively impact corporate culture and the sustainability of the company."

However, the court explained the reason for the reduced sentence, stating, "The defendant, burdened by the responsibilities of succession from a young age, relied on a small circle of acquaintances, which led to these crimes coming to light, and he has also been embroiled in family disputes, facing very difficult circumstances. After the conclusion of the pleadings, he submitted two handwritten letters of reflection, and based solely on their content, he appears to be genuinely remorseful and sincerely reflecting on his actions this time."

Previously, the first trial had found Chairman Cho guilty of embezzlement and breach of trust totaling about 7 billion won and sentenced him to three years in prison, leading to his immediate detention in court.