60s accused of embezzling 3 billion won in 'Capital-free M&A listed company joint management' acquitted again in 2nd trial

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[Asia Economy Reporter Kim Daehyun] A man in his 60s who was prosecuted for embezzling tens of billions of won under the pretext of a joint management contract deposit without disclosing the management status of a listed company acquired through a no-capital M&A was acquitted in both the first and second trials.

According to the court on the 13th, the Seoul High Court Criminal Division 13 (Presiding Judge Choi Suhwan) recently upheld the not guilty verdict in the appeal trial of Mr. A (63), who was indicted for violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud), just as in the first trial.

According to the prosecution, the investment association led by Mr. A purchased about 3.2 million shares and management rights of a KOSDAQ-listed auto parts company through a no-capital merger and acquisition (M&A) in 2016 for 50 billion won. Most of the purchase funds were raised through private lenders on the condition that the stocks and management rights were provided as collateral. At the extraordinary general meeting of shareholders, people nominated by Mr. C, an acquaintance of the private lender and a contributor to part of the purchase funds, were appointed as directors.

However, the prosecution judged that Mr. A concealed these facts and received 3 billion won from Company B, which was attempting to acquire the listed company, under a joint management contract. Company B claimed, "The investment association did not provide materials related to corporate due diligence, did not keep the resignation letters of directors and auditors at the law firm, and violated the joint management contract by not carrying out notarization," and filed a complaint against Mr. A.

The first trial acquitted him. It stated, "The board of directors was convened with the defendant's intention, and two directors nominated by Company B were appointed. The articles of incorporation were amended to add business objectives related to Company B's technology development and were disclosed. The defendant took direct executive actions for joint management," and added, "It is difficult to see that the fact that Mr. C received the management rights as collateral or planned repurchase or resale was problematic."

Furthermore, it said, "Company B also knew about the change in management rights and proposed joint management to the defendant," and "If the defendant had received the remaining payment stipulated in the joint management contract from Company B, he could have retrieved the shares pledged to each savings bank as collateral and enabled joint management." The court also found that Mr. A was not responsible for the stock price decline and forced sales after the contract was signed.

During the second trial, which proceeded due to the prosecutor's appeal, Mr. A's lawyer argued, "Since the complainant already knew the relevant circumstances, it cannot be considered a violation of the duty to notify." The presiding judge even asked, "Aren't both the defendant and Company B corporate raiders attempting similar no-capital M&As?" Mr. A claimed, "There was absolutely no reason to deceive Company B," and stated that he started work as Company B wished.

The appellate court ultimately upheld the first trial's judgment. The court stated, "The defendant attempted a no-capital M&A by using this investment association and did not properly disclose the actual source of funds and stocks," but added, "It appears that a revised agreement was made between both parties regarding the submission of financial status materials and the appointment of directors. Considering the occupations and careers of those involved in the joint management contract execution process on Company B's side, it is difficult to conclude that the defendant deceived Company B."

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