Supreme Court Remands HyoSung Cho Seok-rae's '130 Billion Won Tax Evasion' Case... Partial Acquittal Intended

[Asia Economy Reporter Seongpil Cho] The Supreme Court has overturned and remanded the case of former Hyosung Group Chairman Cho Seok-rae, who was on trial for embezzlement and breach of trust involving billions of won, partly acquitting him.

On the 30th, the Supreme Court's 3rd Division (Presiding Justice Taeak Noh) overturned the original sentence of 3 years imprisonment and a fine of 135.2 billion won against former Chairman Cho, who was indicted for violating the Act on the Aggravated Punishment of Specific Crimes (tax evasion), and sent the case back to the Seoul High Court. The original sentence of 2 years and 6 months imprisonment with a 3-year probation for his son, Hyosung Chairman Cho Hyun-joon, was upheld.

The court reversed part of the original ruling that had found former Chairman Cho guilty of tax evasion charges, acquitting him on those grounds. The court stated, "Even if the tax authority cancels the initial tax imposition for reasons other than those on which the tax evasion prosecution was based, tax evasion cannot be established on the premise of the existence of a tax debt."

The court overturned the original ruling that had acquitted him of illegal dividend distribution, now ruling it as guilty. The court explained, "It is not legally permissible for a company to use capital reserves accumulated by the end of the relevant fiscal year as a source for profit dividends in the same fiscal year," adding, "Even if the company’s directors were aware of the capital reserves at the time of the dividend distribution, that alone does not negate the intent required for the crime of illegal dividend distribution."

Previously, former Chairman Cho was 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. He was also charged with evading 123.7 billion won in corporate tax through 10 years of accounting fraud involving 500 billion won and evading income tax on capital gains by buying and selling stocks worth billions of won under borrowed names.

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

In the first trial, some charges of tax evasion and illegal dividend distribution were recognized as guilty, sentencing former Chairman Cho to 3 years imprisonment and a fine of 136.5 billion won. However, considering his health condition, he was not detained in court. Chairman Cho was sentenced to 1 year and 6 months imprisonment with a 3-year probation.

The second trial acquitted some of former Chairman Cho’s charges, explaining that the tax evasion was not for the purpose of evading taxes 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 3 years imprisonment and a fine of 135.2 billion won, reduced from the first trial. However, Chairman Cho’s sentence was maintained.

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