Corp-Ethics.com - Report: Hyundai's boss gets three years

Company	Hyundai [Company Info]
	Track this Company (an email will be sent to you everytime a report is filed about this company)

Date	Issue	Title
5th Feb 2007	Fraud Investigation	Hyundai's boss gets three years

Report

The chairman of Hyundai Motor Company, one of South Korea's biggest firms, has been sentenced to three years in jail for embezzlement and breach of trust.

Chung Mong-koo, 68, was accused of amassing a multi-million dollar slush fund for personal use and to pay lobbyists and politicians.

A spokesman for South Korea's top auto maker said the ruling was disappointing and that an appeal would be filed.

The court allowed Chung to remain on bail while he fights the appeal.

Before the verdict, analysts said the conviction could harm South Korea's car sector and the wider economy.

Chung was accused of embezzling 103.4bn won ($110m;£56m) from company affiliates.

Some of the money was allegedly used to pay off politicians and government officials, and also help smooth the way for Chung's son to take control of the auto group.

"The court decided a strict execution of law is necessary to eradicate illegal and anti-market practices in the past and help South Korea build a more advanced economy," Kim Dong-oh, presiding judge at the Seoul court, said.

He said Chung's action's were "clearly criminal".

Prosecutors - who had sought a six-year sentence - had argued during the trial that Chung's crimes were "grave".

But Judge Kim said the lesser sentence was given taking into account Chung's "big contributions to the development of the country's economy" and also his involvement in charity.

Chung's lawyers had argued that the chairman should be granted a suspended sentence because of the damage a jail term might mean to South Korea's economy. They had also cited health reasons.

Chung looked grim as the verdict was read and later walked silently from the courtroom.

He previously asked for leniency and promised to improve the firm's corporate governance.

Hyundai Motor Company said it would appeal.

"We are greatly disappointed by the court ruling today," company spokesman Jake Jang said.

The trial has been closely watched in South Korea, where it has been seen as a test of the court's commitment to tackle corporate corruption, the BBC's Charles Scanlon in Seoul says.

In the past the courts have treated similar cases with great leniency, but there has been growing pressure from the government and the public to impose stiffer penalties, he adds.

Before the ruling, experts said the conviction could harm South Korea's car sector.

The imprisonment could "have a grave impact on the industry as well as the national economy", said Yong-Dae-in, an analyst with Goodmorning Shinhan Securities.

Shares in Hyundai Motor Company were down 2.44% after the verdict, Reuters news agency reported.

Hyundai - and its affiliate Kia Motors, which is headed by Eui-sun, Mr Chung's son - represent some 70% of South Korea's vehicle exports, making it a vital part of the economy.

Other Reports on Hyundai
Date	Issue	Company	Report
13th Jun 2006	Fraud Investigation	Hyundai	Hyundai chief admits fraud
16th May 2006	Other Issue	Hyundai	Hyundai chairman Chung indicted
28th Apr 2006	Other Issue	Hyundai	Hyundai boss arrested in South Korea
27th Apr 2006	Other Issue	Hyundai	Prosecutors seek Hyundai arrest
24th Apr 2006	Other Issue	Hyundai	Hyundai chief faces prosecutors
19th Apr 2006	Other Issue	Hyundai	Hyundai apologises amid scandal
28th Mar 2006	Fraud Investigation	Hyundai	Hyundai chief faces fraud probe

Related Reports from the Automobile Industry
Company	Issue	Report
DaimlerChrysler	Other Issue	Watchdog probes DaimlerChrysler
Daewoo	Fraud Investigation	Daewoo boss gets 10 years in jail
DaimlerChrysler	Other Issue	Daimler 'acts over Iraq bribes'
Mitsubishi	Other Issue	Former Mitsubishi bosses arrested
General Motors	Positive Work	GM chief agrees to halve salary