Supreme Court Confirms Probation for Lee Gangnam, Chairman of Gwangdong Korean Medicine Hospital, in 'Embezzlement in the Course of Duty' Case

Supreme Court Grand Bench./Photo by Supreme Court

[The Asia Business Daily Legal Affairs Correspondent Choi Seokjin] Lee Kangnam, Chairman of Kwangdong Korean Medicine Hospital (62), who was brought to trial on charges of embezzling approximately 300 million won from a company in which he held a 100% stake, has received a final sentence of imprisonment with a suspended sentence.

The Supreme Court’s Second Division (Presiding Justice Lee Dongwon) upheld the lower court’s ruling, which found Lee guilty only of occupational embezzlement and not guilty of violating the Act on Regulation and Punishment of Concealment of Criminal Proceeds. The court finalized the sentence of six months in prison with a one-year suspension of execution.

The bench explained, “There was no violation of logical or empirical rules, nor was there any misinterpretation of the legal principles regarding the establishment of the crime of concealment of criminal proceeds in the lower court’s judgment.”

Lee did not appeal the conviction for occupational embezzlement, so the Supreme Court review was limited to the not-guilty verdict on the charge of violating the Act on Regulation and Punishment of Concealment of Criminal Proceeds, which was appealed by the prosecution.

Prosecutors charged Lee with occupational embezzlement, alleging that from February 2014 to March 2016, he embezzled approximately 315 million won from Company A, in which he owned 100% of the shares under borrowed names, and used the funds for personal purposes such as living expenses and credit card payments.

Additionally, during this process, Lee was accused of violating the Act on Regulation and Punishment of Concealment of Criminal Proceeds by pretending to pay salaries or severance pay to fictitious employees who did not actually work at Company A as a way to secure funds.

However, the first and second trials acquitted him of this charge, stating, “The criminal act that generated the criminal proceeds in this case was the defendant’s embezzlement. The act of paying salaries under false employee names and reclaiming the funds is merely part of the occupational embezzlement itself, which generated the criminal proceeds, and thus cannot be considered a separate violation of the Act on Regulation and Punishment of Concealment of Criminal Proceeds.”

The lower courts’ decision was based on a previous Supreme Court ruling, which held that “an act of disguising the cause of criminal proceeds under the Act on Regulation and Punishment of Concealment of Criminal Proceeds refers to making it appear as though a non-existent fact exists or as though an existing fact does not exist regarding the cause of the criminal proceeds. Such acts must be evaluated as separate from the criminal act that generated the criminal proceeds. If it is limited to the act itself, it does not fall under this provision.”

The Supreme Court agreed with this interpretation.

Meanwhile, the court also dismissed the prosecution’s appeal regarding the acquittal of advertising agency CEO B, who was tried alongside Lee on charges of offering over 1.1 billion won in gift certificates as rebates for breach of trust bribery.

The first and second trials found that there is a general practice of commission refunds in the advertising industry and concluded that B’s proposal for a commission refund could not be considered an improper solicitation.

The Supreme Court has previously held that, although the crimes of breach of trust acceptance (receiving kickbacks) and breach of trust bribery (giving kickbacks) are typically “necessary accomplice” offenses, this does not mean that both the giver and the receiver must always be punished together. Furthermore, it has ruled that a request that is legitimate work for the giver may still be considered an improper solicitation for the receiver.

Lee is the third son-in-law of the late Choi Subu, founder of Kwangdong Pharmaceutical, and previously served as Head of Planning and Coordination and Head of the Management Division at Kwangdong Pharmaceutical.

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