'No Guilty Verdict Confirmed for Nene Chicken Chairman in Son's Company Unfair Profit Case'
Hyun Cheol-ho, chairman of Nene Chicken, who was indicted on charges of causing company losses by involving a company owned by his son in the procurement process of raw materials, was acquitted by the Supreme Court.
According to the legal community on the 19th, the Supreme Court's First Division (Presiding Justice Kim Seon-su) confirmed the lower court's ruling the day before, which acquitted Chairman Hyun, who was tried on charges of breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes.
In September 2015, Nene Chicken signed a contract with a new supplier to receive chicken sauce, stipulating that the raw materials for the sauce be supplied by Company A, owned by Hyun's son. The prosecution judged that Company A supplied the sauce raw materials from October 2015 to January 2019 at prices up to 38% higher than market value, gaining approximately 1.75 billion KRW, causing equivalent losses to Nene Chicken, which received the materials.
The prosecution indicted Chairman Hyun and his brother, who led the establishment of Company A, on breach of trust charges. Company A was also charged with violating the Tax Offenses Punishment Act.
The first trial sentenced Chairman Hyun and his brother to three years in prison with a five-year probation and jointly ordered the confiscation of 1.75 billion KRW. Fines of 1.7 billion KRW and 50 million KRW were also imposed on Chairman Hyun and Company A, respectively. The second trial overturned the first trial, ruling that it could not be definitively concluded that Nene Chicken suffered losses, and acquitted both the Hyun brothers and Company A.
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The court ruled that Nene Chicken actually benefited by preventing the external leakage of the chicken sauce manufacturing method through the transaction structure involving Company A. Although the prosecution argued that Company A was established to reduce gift tax or inheritance tax, the court judged, "Considering the Corporate Tax Act and Income Tax Act regulations, it is difficult to conclude that Chairman Hyun's side reduced gift tax or other taxes."
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