Latest Automotive News

Subscribe in a reader

Appeals court suspends prison term for Hyundai Motor chairman

Email   small font medium font large font


SEOUL, South Korea (AP) _ An appeals court suspended on Thursday a three-year prison term handed to Hyundai Motor Co. Chairman Chung Mong-koo for embezzlement, saying the tycoon is too important to South Korea's economy to go to jail.

A three-judge panel at the Seoul High Court suspended the sentence for five years, meaning that the 69-year-old head of the world's sixth-largest automaker will avoid prison as long as he keeps a clean record during that period.

A lower court had sentenced Chung in February to three years for embezzling more than US$100 million in company money to set up a slush fund. Prosecutors say the fund was used to pay lobbyists to gain government favours and for personal use.

Presiding Judge Lee Jae-hong told the packed courtroom that Hyundai Motor has great influence over the nation's economy and Chung, its hands-on leader, is the symbol of the company.

``I am also a citizen of the Republic of Korea,'' Lee said. ``I was unwilling to engage in a gamble that would put the nation's economy at risk.''

Chung, free on bail after spending two months in jail for questioning after his arrest in April last year, has been actively running the company, which has ambitions to become the work's fifth-largest automaker by 2010.

Lee said he struggled with the decision, originally set for July 10, and postponed it twice, saying the court needed more time. He said he sought the views of various people, including other judges, prosecutors, lawyers, journalists and ``even taxi drivers and restaurant employees.''

In his appeal, Chung asked the court to be allowed to avoid prison to devote his energies to South Korea's biggest automaker to contribute to the country's economy.

Prosecutors sought a six-year prison term, the same as their original demand, saying the original decision was not harsh enough for the crime.

It was not immediately clear whether prosecutors planned to appeal to the Supreme Court. A lawyer for Chung said earlier Thursday that the top court only hears cases involving guilt or innocence, suggesting that an appeal regarding the sentencing would be unlikely.

Kim Kyung-soo, a spokesman for the Supreme Public Prosecutors' Office, said Chung remains guilty.

``It's not that he was found innocent,'' Kim said. ``Therefore, it is not appropriate for us to comment on the weight of the sentence.''

Chung has pushed Hyundai Motor to expand aggressively overseas, building factories in China, India, Turkey and the United States, with another one currently under construction in the Czech Republic.

Hyundai Motor affiliate Kia Motors Corp. has done the same, manufacturing cars in China and Slovakia and building another plant in the U.S. state of Georgia, near Hyundai Motor's factory in Alabama.

Last year, Hyundai Motor and Kia Motors accounted for about 72 per cent of South Korea's automobile exports. Autos account for 13 per cent of the country's total exports.

Chung, one of South Korea's richest people, is known as a micro-manager with a top-down operating style. Hyundai Motor, along with Kia Motors, floundered during his jailing last year, with key decisions related to overseas plants and other issues delayed.

Park Wan-gi, deputy director of civic activist group Citizens' Coalition for Economic Justice, said the ruling could be controversial by encouraging the perception that the rich can avoid jail.

``The suspension of the prison term could have negative implications,'' Park said, saying crimes committed by South Korea's family-run conglomerates aren't likely to be halted.

In a similar case involving another tycoon, the Seoul High Court in 2005 suspended a three-year prison term for accounting irregularities handed to Chey Tae-won, CEO and chairman of South Korea's leading oil refiner, SK Corp., now known as SK Energy.

Hyundai Motor welcomed the decision.

``We are greatly relieved that this matter is finally over,'' the company said in a statement. ``We can now devote our full energies to addressing the numerous challenges that face us and building a global brand.''

The court also ordered Chung to fulfil a promise he made to donate 1 trillion won (US$1.1 billion) of his personal assets to society.

Chung was also ordered to do community service _ giving business organizations lectures about lawful management and contributing articles to magazines and daily newspapers on the same topic.

Chung made the donation pledge last year before his arrest as the slush fund scandal was developing. It came as part of a public apology he issued and was seen as an attempt to earn leniency.

Hyundai Motor shares rose as much as 2.2 per cent after the verdict was announced about 10 minutes before the close of trading. They fell back, however, to finish 0.6 per cent higher at 71,800 won (US$76). The company's share price has risen 6.5 per cent this year.

Receive the latest automotive news by email!

Enter your email address:

Related news
SEOUL, South Korea (AP) _ An appeals court suspended a three-year prison sentence for Hyundai Motor Co. chairman Chung Mong-koo on Thursday, saying the tycoon is too important to South Korea's economy to ...
Prosecutors demanded a six-year prison term for Hyundai Motor Co. cairman Chung Mong-koo on embezzlement and other charges Tuesday, adding to the woes of the largest South Korean automaker. Chung, ...
SEOUL, South Korea (AP) _ Hyundai Motor Co. chairman Chung Mong-koo, appealing an embezzlement conviction and prison sentence, on Tuesday affirmed his promise to donate one trillion won (US$1.1 billion) worth of personal ...
SEOUL, South Korea (AP) _ Hyundai Motor Co. said Saturday its labour union has voted in favour of going on strike amid annual wage negotiations. According to an e-mail from the automaker, 28,243 ...
Hyundai Motor Co. said Monday it plans to build a factory in Russia, though key details including the location of the plant and size of the investment remain undecided. Hyundai Motor chairman Chung ...
Riot police were deployed at Hyundai Motor Co.'s headquarters in Seoul on Wednesday as around 1,000 workers held a largely peaceful protest amid a dispute with management over bonuses. The ...
South Korea's Hyundai Motor Co. launched its new rear-wheel drive Genesis luxury sedan Tuesday, setting a goal of selling 55,000 of the vehicles this year. Hyundai Motor said in a statement it invested ...

Best Investment Newsletter

- 46% in 2008

- invest in the best performing US stocks only and sell them when the uptrend is over

- very easy to follow, simple buy/sell signals

- no need to have investing or trading experience

Find More Now!

Appeals court suspends prison term for Hyundai Motor chairman
> © 2006-2017 except where otherwise noted