Honorary Chairman Jo Seok-rae Steps Up for Reputation Restoration

Partial Acquittal on Tax Evasion Charges by Supreme Court

Plans to Exercise Right to Defense in Retrial

[Asia Economy Reporter Park Soyeon] Jo Seok-rae (85), Honorary Chairman of Hyosung Group, is set to restore his honor after overcoming long-standing judicial risks. Despite undergoing his third cancer surgery in July, Chairman Jo plans to actively exercise his right to defense in the upcoming retrial.

The Supreme Court's 3rd Division (Presiding Justice No Tae-ak) on the 30th overturned the original ruling that sentenced Chairman Jo to three years in prison and a fine of 135.2 billion KRW on charges including tax evasion under the Act on the Aggravated Punishment of Specific Crimes, and remanded the case to the Seoul High Court. Chairman Jo had been on trial for charges including evading corporate tax by replacing non-performing assets in accounting books with machinery and equipment and then accounting for depreciation expenses, as well as embezzling funds raised under the name of technology fees.

Some in the legal community interpret the Supreme Court's decision as recognizing that the company did not intend to evade taxes in a special situation where it had to resolve non-performing assets. There is growing attention to the possibility that the retrial may result in a lighter sentence than the original three-year imprisonment for Chairman Jo.

Chairman Jo’s side plans to refute the charges point by point in the retrial, citing the circumstances of the time and the fact that there was no reduction in national tax revenue. During the IMF foreign exchange crisis, when major companies relied on public funds, Hyosung Group took on 470.3 billion KRW in debt from Hyosung Corporation through a merger. However, the company argues that it was impossible to handle the debt due to a financial restructuring agreement with its main bank, which required a debt ratio below 200%.

They also submitted evidence including memoirs of former Financial Services Commission Chairman Lee Heon-jae, who directly warned Chairman Jo that the group would face dissolution if it did not take on Hyosung Corporation’s debt during the IMF crisis. Hyosung stated, "It is fortunate that it was clearly recognized that the company was not harmed and there was no pursuit of private gain through this ruling. We will actively clarify in the retrial the parts of the original ruling that were recognized as guilty but overturned by the Supreme Court with a not guilty verdict."

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