Former Hyosung Chairman Cho Seok-rae, Accused of Embezzlement and Breach of Trust Worth Tens of Billions, Supreme Court Verdict Today

[Asia Economy Reporter Baek Kyunghwan] The Supreme Court is set to deliver a ruling on former Hyosung Group Chairman Cho Seok-rae, who has been tried on charges including embezzlement and breach of trust involving billions of won, and his son, Chairman Cho Hyun-joon, who faces charges of embezzlement and tax evasion.

On the 30th, the Supreme Court's Third Division (Presiding Justice No Tae-ak) will hold a hearing for the final appeal verdict regarding former Chairman Cho and others, who were indicted for violating the Act on the Aggravated Punishment of Specific Crimes (tax-related offenses) and other charges.

Former Chairman Cho is accused of embezzling 70 billion won of Hyosung’s overseas subsidiary funds through a paper company and causing a loss of 23.3 billion won by having Hyosung’s Singapore subsidiary waive the loan debt of this paper company. In particular, he is also charged with evading 123.7 billion won in corporate tax through accounting fraud amounting to 500 billion won over 10 years, and evading income tax on capital gains by buying and selling stocks worth billions of won under borrowed names.

His eldest son, Chairman Cho Hyun-joon, was indicted on charges of embezzlement for using the company’s corporate card for personal purposes, and tax evasion for receiving remittances under the name of the U.S. subsidiary or taking over accounts under the name of overseas subsidiaries to evade gift tax.

In the first trial, some charges of tax evasion and illegal dividends were recognized as guilty, sentencing former Chairman Cho to three years in prison and a fine of 136.5 billion won. However, considering his health condition, he was not detained in court. Chairman Cho was sentenced to one year and six months in prison with a three-year probation.

The second trial acquitted some of former Chairman Cho’s charges, explaining that the tax evasion was not intended but occurred during the process of restructuring bad assets for corporate survival. Accordingly, some charges of tax evasion through borrowed-name stocks by executives and employees were acquitted, and he was sentenced to three years in prison and fined 135.2 billion won, a reduction from the first trial. However, Chairman Cho’s sentence was maintained.

The court stated, "The tax evasion crimes were committed over a long period, and the evaded tax amount reached 134.8 billion won. The corporate tax evasion through accounting fraud was carried out in a planned and organized manner, and more than 400 borrowed-name accounts were used for evading capital gains tax and comprehensive income tax."

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