Chung Mong-koo, the chairman of Hyundai Motor on Thursday had his three-year prison sentence for fraud suspended, leaving him free to run the company.
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The Seoul High Court suspended the jail term for Chung Mong-koo for five years, citing his contribution to the national economy and the challenges that Hyundai faces in competitive global auto markets.
However, the court upheld his convictions on the charges of embezzlement and breach of trust.
The suspension is also contingent on Mr Chung, the son of Hyundai’s founder, fulfilling his promise to donate about Won1,000bn to charity, building a concert hall, opera house and other cultural centres nationwide over the next seven years.
The ruling could also revive the debate on South Korea’s powerful and controversial “chaebol” conglomerates which opponents say have been given special treatment owing to their political clout and importance to Korea’s economy.
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By GlobalData“The Hyundai Motor Group plays a huge rule in the country’s economy and Chung has an instrument role,” said Judge Lee Jae-hong. “I don’t want to take a gamble on causing a crisis in the country’s economy [by putting him in jail].”
“Hyundai Motor is the top enterprise because of its ripple effect on the whole economy. The accused, Chung Mong-koo, is a symbol of Hyundai Motor and our country’s automobile industry,” he said
“I did ask many people, including restaurant waiters, taxi drivers and reporters. The ordinary people leaned toward a suspended sentence,” he said. “That means the accused should work hard.”
Lawyers representing the chairman and Hyundai had asked for judicial leniency on Mr Chung’s sentencing, stressing that the Korean carmaker is at a critical stage for overseas expansion.
Hyundai and business lobby groups welcomed Thursday’s verdict.
“We are greatly relieved that this matter is finally over. We can now devote our full energies to addressing the numerous challenges that face us and building a global brand,” Hyundai said.
Hyundai’s chairman was arrested in April 2006 on allegations that Hyundai and its affiliates set up slush funds to pay for political favors. The chairman admitted last year to having a role in setting up the slush funds.
The lower court granted Chung USD1m bail to continue running Hyundai after he spent two months in jail.
