Former CJ Vice Chairman Lee Jaehwan Found Guilty of Embezzlement and Breach of Trust Involving 2.6 Billion KRW... Suspended Prison Sentence

[Asia Economy Reporter Kim Suhwan] Lee Jaehwan, former vice chairman and younger brother of CJ Group Chairman Lee Jaehyun, was sentenced to a suspended prison term in the first trial on charges of embezzlement and breach of trust amounting to a total of around 2 billion KRW, including purchasing a yacht with company funds.

According to the legal community on the 16th, the Seoul Central District Court Criminal Division 25-3 (Presiding Judges Park Sarang, Kwon Seongsu, Park Jeongje) sentenced former Vice Chairman Lee, who was indicted on charges of embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes and embezzlement and breach of trust in the course of business, to two years in prison with a three-year suspension.

Lee was brought to trial last September on charges of embezzling and breaching trust involving a total of over 2.7 billion KRW of company funds while serving as CEO of Jaesan Communications and CJ Powercast, as well as head of the HR team at CJ CheilJedang.

Investigations revealed that in 2016, Lee purchased a yacht for personal use with 1.4 billion KRW of company money, and between 2012 and 2013, he bought a passenger car worth about 110 million KRW and a camping car worth about 150 million KRW using company funds.

Additionally, it was uncovered that he housed his personal secretaries near his residence, had them accompany him on private schedules such as massages, saunas, walks, and exercise, effectively using them as personal assistants while paying their salaries with company money.

During the trial, Lee argued, "The yacht was purchased for business purposes to entertain advertisers, so it is not embezzlement," but the court did not accept this claim.

The court acknowledged most of the charges as guilty, pointing out, "The defendant, as CEO, had the duty to strictly and transparently manage the company’s funds and accounting, but he used company funds for personal purposes."

The court explained the sentencing background by noting, "Considering that the defendant paid a deposit of 1.4 billion KRW as compensation for losses with personal funds, effectively reimbursing all actual losses and damages."

However, the court also considered that some of the secretaries’ duties were related to the company and decided to exclude about 100 million KRW from the embezzlement amount. The total embezzlement and breach of trust amount recognized as guilty against Lee was approximately 2.67 billion KRW.

Meanwhile, Lee resigned from his positions as CJ Vice Chairman and CEO of CJ Powercast on the 3rd of last month, after the conclusion of the defense in this case.

Previously, Lee had served as CEO of the advertising agency Jaesan Communications since 2007, and when this company was merged into the broadcasting transmission agency CJ Powercast in 2016, he worked as an inside director before becoming CEO again in 2017.

Separately, Lee held positions at CJ CheilJedang, CJ O Shopping, and other affiliates since 1990, and had been working as head of the HR team at CJ CheilJedang since November 2017.

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