Supreme Court: "'Golf Course Membership High-Price Purchase' Heungkuk Fire & Marine Management... Must Compensate Company 1.1 Billion Won"

[Image source=Pixabay]

[Asia Economy Reporter Kim Daehyun] The Supreme Court has ruled that the management of Heungkuk Fire & Marine Insurance, who purchased golf club memberships at prices higher than the market value, must compensate the company 1.1 billion KRW.

On the 2nd, the Supreme Court's First Division (Presiding Justice Lee Gitaek) announced that it upheld the appellate court's partial ruling in favor of the plaintiff in the damages claim lawsuit filed by Good Corporate Governance Institute (CGCG), a shareholder of Heungkuk Fire & Marine Insurance, against former Taekwang Group Chairman Lee Hojin and former directors of Heungkuk Fire & Marine Insurance.

Previously, Heungkuk Fire & Marine Insurance purchased 24 golf club memberships owned by a Taekwang Group affiliate at 1.3 billion KRW each, which was 200 million KRW higher than the market price per membership. Additionally, from 2006 to 2008, the company took over refund guarantee insurance contracts (RG insurance) for 84 ships, but due to insurance incidents involving 25 ships, it failed to recover over 210 billion KRW. CGCG filed a lawsuit claiming that the management at the time should compensate for damages totaling approximately 230 billion KRW.

The first trial ruled that the defendants must pay about 2.6 billion KRW in damages. The court stated, "Article 111, Paragraph 1 of the former Insurance Business Act stipulates that 'insurance companies shall not engage in sales transactions under conditions significantly disadvantageous compared to ordinary trading conditions,'" and judged that purchasing the golf club memberships under such conditions violated the law. However, regarding the RG insurance incidents, the court dismissed the plaintiff's claim, stating, "There is no evidence to recognize that the defendants neglected their supervisory duties at the time of insurance contract conclusion."

The second trial also recognized liability only for the purchase of the golf club memberships. However, the court pointed out, "The membership agreement of the golf club stipulates that the full membership fee paid by August last year, the expiration date of the membership contract, can be refunded," and added, "It is difficult to see that damages exceeding the amount of the overpaid difference at the time of purchase, equivalent to the full membership fee, occurred." Accordingly, the compensation amount was set at about 1.1 billion KRW, less than the first trial.

The Supreme Court also agreed with this judgment. The court stated, "The appellate court did not err in the legal principles regarding the directors' breach of supervisory duties and the calculation of damages," and dismissed all appeals.

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