Chairman Chung Sentenced to 3 Years.

Chung Mong-koo, chairman of Hyundai Automotive Group, was sentenced to three years in prison for embezzling company funds worth about 90 billion won and causing a fund loss of roughly 210 billion won to affiliated companies, said the Seoul Central District Court. However, the court permitted Chung to be released on bail in order to minimize the negative impact on the economy and to secure his right to defend himself.

Chung is likely to file an appeal against the decision.

The court announced that Chung had completely violated transparency and soundness rules for corporate management by secretly amassing outside funds for a long time and that those illegal customs should be eradicated for the country to advance.

The court added, “Even if Chung’s contribution to the Korean economy is huge, those apparent criminal behaviors should be strictly judged.”

He was found guilty of all charges, including raising a slush fund worth about 103.4 billion won from Hyundai and Kia Motors, embezzling about 69.3 billion won in slush funds, causing 167 billion won worth of damage to affiliated companies, by increasing the Hyundai Space and Aircraft corporation’s paid-in capital. He also embezzled $18.3 million of foreign fund profits, causing damages of $39 million to Hyundai Motors in the process of Hyundai’s paid-in capital increase plan, and transacted illegal bonds by increasing Bontec’s paid-in capital.

Meanwhile, Kim Dong-jin, vice-chairman of Hyundai Motors, was sentenced to 2.6 years in prison and four years of probation, while Chief Financial Officer Lee Jung-dae and Chief Procurement Officer Kim Seung-nyun also received 2.6-year jail terms and three years probation.

will71@donga.com