Hyundai Chairman's Prison Term Suspended

Appeals court suspended Chairman Chung Mong-koo's three-year sentence for embezzlement, saying the tycoon is too important to South Korea's economy to go to jail.

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 the equivalent of more than US$100 million (euro73 million) in company money to set up a slush fund. Prosecutors say much of the fund was used to pay lobbyists to gain government favors and for personal use.
Presiding Judge Lee Jae-hong told the packed courtroom that Hyundai 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 Hyundai, which has ambitions to become the work's fifth-largest automaker by 2010.
Lee 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.
The court also ordered Chung to fulfill a promise he made last year to donate 1 trillion won (US$1.1 billion; euro780 million) of his personal assets to society and told him to do community service.
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 and Kia accounted for about 72 percent of South Korea's automobile exports. Autos account for 13 percent of the country's total exports.
Hyundai welcomed the decision.
''We can now devote our full energies to addressing the numerous challenges that face us and building a global brand,'' it said in a statement.
Analysts say Hyundai faces problems including softer sales in the United States and China and further mending troubled relations with its strike-prone labor union.
A new wage deal Hyundai struck with its unionized workers this week was a positive development but ''more work needs to be done to be able to wipe rocky labor-management relations off Hyundai's list of risk factors,'' said Chung Sung-yob, an analyst at Daiwa Securities Korea.
The deal, if approval by the union rank-and-file, would mark the first time in a decade that Hyundai has averted a strike over annual salary negotiations.
Some in South Korea found the court's decision troubling.
Park Wan-gi, an activist with the Citizens' Coalition for Economic Justice, denounced the ruling, saying it reinforced the perception that the rich can avoid jail.
In a similar case, 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 SK Energy.
Associated Press writers Kwang-tae Kim and Sangwon Yoon contributed to this report.
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