Supreme Court Remands Former Hi-Mart Chairman Seon Jong-gu Case... "Guilty of Breach of Trust as Well"

"Violation of Duty, Causing Financial Damage to the Company"

Seon Jong-gu, Former Chairman of Hi-Mart

[Asia Economy Reporter Seongpil Cho] Former Hi-Mart chairman Seon Jong-gu will face a retrial in the appellate court. The Supreme Court ruled that the leveraged buyout (LBO) method used in the merger and acquisition (M&A) process, which was previously judged as not guilty by the lower court, is guilty.

The Supreme Court's First Division (Presiding Justice Kim Seon-su) overturned the original ruling that sentenced former chairman Seon to three years in prison with a four-year probation and a fine of 2 billion KRW on charges including breach of trust and tax evasion, and remanded the case to the Seoul High Court on the 15th. The court recognized the breach of trust charge against Seon in the LBO-style corporate acquisition combined with the merger, where the acquired company was considered the victim. The court stated, "The mortgage debt secured on Hi-Mart's real estate included the loan debt of a special purpose company (SPC) established by the acquirer," and added, "Since there is a risk that the SPC may be liquidated if it fails to repay, former chairman Seon violated his duties as CEO and caused financial damage to Hi-Mart."

Seon was indicted without detention on charges of causing approximately 240 billion KRW in damages by providing company assets as collateral for foreign fund acquisition loans during the 2005 Hi-Mart M&A process. He was also accused of making a side agreement allowing Eugene Group, which bid 200 billion KRW lower than competitors in the 2008 secondary sale, to acquire Hi-Mart, and embezzling hundreds of billions of KRW during company operations.

The appellate court found guilty, unlike the first trial, on charges including causing Hi-Mart a loss of 300 million KRW by inserting his own company into a construction contract, evading 800 million KRW in gift tax during the purchase of a foreign luxury residence, and having the company buy his paintings at inflated prices. However, it acquitted him, as in the first trial, on charges of causing thousands of billions of KRW in damages through the M&A and evading 74.5 billion KRW in gift tax during the stock gifting process through sale dividends.

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