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
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
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
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
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
``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
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
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.