'Breach of Trust and Embezzlement' Former Hi-Mart Chairman Seon Jong-gu Files Final Appeal

[Asia Economy Reporter Bae Kyunghwan] Former Hi-Mart Chairman Seon Jong-gu, who was found guilty of causing the company losses worth hundreds of billions of won during the sale of Hi-Mart, has filed a final appeal.

On the 26th, according to the legal community, both Seon’s side and the prosecution submitted an appeal to the Seoul High Court Criminal Division 6-2 (Presiding Judges Jeong Chong-ryeong, Jo Eun-rae, Kim Yong-ha) in objection to the ruling of the retrial after remand.

Seon is accused of arranging for the special purpose company (SPC) Hi-Mart Holdings to borrow acquisition funds during the sale of Hi-Mart to the private equity fund AEP (Affinity Equity Partners) through a leveraged buyout (LBO) in 2005.

The first and second trials acquitted Seon of breach of trust charges. However, the Supreme Court ruled that since Hi-Mart Holdings, which was not a direct party to the merger and acquisition contract, could cause Hi-Mart to suffer losses if it failed to repay the loan, the breach of trust charge was valid and sent the case back to the Seoul High Court.

In the retrial after remand, Seon was found guilty of breach of trust and sentenced to five years in prison, a fine of 30 billion won, and a confiscation of 230 million won.

Meanwhile, Seon was also found guilty of using company funds amounting to 120 million won for his son's overseas study expenses, receiving a 10-month prison sentence with a two-year probation in the first trial, and a three-year prison sentence with a four-year probation in the second trial.

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