Court Suspends Sentence for Eldest Son of HiteJinro Chairman Over Preferential Work Allocation to Specific Affiliate

[Asia Economy Reporter Seongpil Cho] The court sentenced the HiteJinro family and management, who were indicted for unfairly allocating work to a specific affiliate, to prison terms with suspended sentences.

On the 7th, Judge Jaecheon Ahn of the Seoul Central District Court Criminal Division 15 sentenced Park Taeyoung, Vice President and eldest son of HiteJinro Chairman Park Moondeok, who was indicted for violating the Monopoly Regulation and Fair Trade Act, to 1 year and 6 months in prison with a 2-year suspension.

Kim Inkyu, CEO, who was indicted together, was sentenced to 10 months in prison with a 1-year suspension, and Kim Changgyu, Executive Director, was sentenced to 4 months in prison with a 1-year suspension.

The court also imposed a fine of 200 million KRW on HiteJinro Corporation.

The court stated, "The act of unfairly allocating work to a specific affiliate strongly suggests an intention to cover the costs of Park Taeyoung’s succession of management rights, which is highly condemnable," and added, "It is recognized that, even if only implicitly aware of the illegality, they engaged in other illegal acts to avoid it."

However, the court acquitted them of charges related to the sale of Seohae Insight shares due to lack of evidence.

They were indicted for unfairly allocating work worth approximately 4.3 billion KRW from 2008 to 2017 by inserting an affiliate, in which Vice President Park held the largest stake, into the beer can manufacturing and distribution process, a so-called "pass-through fee" method.

HiteJinro supported Seo Young E&T with personnel costs (500 million KRW), pass-through fees for aluminum coil raw materials for beer cans (850 million KRW), and pass-through fees for sealed container lids (1.86 billion KRW). They also indirectly supported Seo Young E&T with 1.1 billion KRW by increasing subcontracting fees, enabling Seo Young E&T to sell shares of its 100% subsidiary Seohae Insight advantageously.

In the previous sentencing hearing, the prosecution requested a 2-year prison term for Vice President Park, stating, "Strict punishment is inevitable to send a warning to the market."

They also requested the court to sentence CEO Kim to 1 year in prison and Executive Director Kim to 6 months in prison with a 2-year suspension.

This case began with the Fair Trade Commission uncovering the violations, imposing fines exceeding 10 billion KRW, and referring Vice President Park and others to the prosecution.

HiteJinro also filed an administrative lawsuit to cancel the fines, but the court recognized that HiteJinro unfairly allocated work to facilitate management succession and ruled that the sanctions against HiteJinro were justified.

This content was produced with the assistance of AI translation services.