'State Manipulation' K-Sports Foundation Faces Consecutive Losses in Contribution Fund Lawsuits

27 out of 39 Cases Concluded in First Trial

Courts are consecutively ruling that the K-Sports Foundation, linked to the Park Geun-hye administration's state corruption scandal, must return the contributions it received from large corporations and their affiliates. Notably, all first-instance rulings in lawsuits related to these contributions have resulted in the foundation's defeat.

[Photo by Beopryul Newspaper]

According to a comprehensive report by Law Times on the 21st, among the 39 cases where the K-Sports Foundation filed declaratory judgments of non-existence of debt against companies that made contributions, 27 have reached first-instance conclusions. The remaining cases are currently pending at the first-instance level.

Recently, the Civil Division 45 of the Seoul Central District Court (Presiding Judge Kim Kyung-soo) ruled against the K-Sports Foundation in a declaratory judgment of non-existence of debt lawsuit (2022gahap562386) filed against SK Telecom. The court ordered the foundation to pay SK Telecom 2.15 billion KRW plus delayed interest, siding with SK Telecom’s counterclaim for the return of unjust enrichment. The court also ruled that the K-Sports Foundation must bear all litigation costs for both the main and counterclaims.

[Photo by Beopryul Sinmun]

The court stated, “SK Telecom contributed 2.15 billion KRW under a mistaken motive, believing the foundation’s establishment plan and stated objectives in its articles of incorporation without knowing the actual purpose and background of the K-Sports Foundation’s establishment.”

Previously, the K-Sports Foundation argued that “most companies, including SK Telecom, made contributions to resolve their individual issues through cooperation with the Blue House, so there could be no mistake in motive,” but the court rejected this, citing lack of evidence.

In particular, the court noted, “The articles of incorporation and business plan of the K-Sports Foundation state that the foundation aims to contribute to creative culture and creative economy by promoting a healthy society and social unity through sports as a medium. However, in reality, the foundation was established according to a plan by Choi Soon-sil to profit by entrusting government-supported projects performed by the foundation, involving public officials’ official misconduct.” The court added, “Appointments of executives and employees, project content, and fund execution were all effectively decided by Choi. The foundation was merely a corporation established for Choi’s private gain, contrary to its stated purpose, and SK Telecom’s mistake was a significant error regarding the contribution act.”

Furthermore, the court emphasized, “The K-Sports Foundation’s establishment involved serious and obvious illegality, including unlawful exercise of public authority and official misconduct, with non-executives effectively controlling and managing the foundation, demanding large sums from major corporations, thereby harming public interest. It is reasonable to conclude that SK Telecom would not have made the contribution had it known these circumstances in advance.”

Such rulings against the plaintiff have been pouring out from various courts since August this year. Cases with first-instance conclusions account for about 70% of all related lawsuits. Earlier, in November and December 2022, the K-Sports Foundation filed declaratory judgments of non-existence of debt against 39 companies that made contributions in 2016, excluding KT. KT filed a lawsuit for the return of unjust enrichment against the K-Sports Foundation in November 2019 and recovered 700 million KRW. That ruling was finalized in May 2022 when the Supreme Court dismissed the appeal without oral argument.

Established in January 2016, the K-Sports Foundation was at the center of the state corruption scandal. Before its establishment, in February 2015, then-President Park instructed Ahn Jong-beom, Senior Secretary for Policy Coordination at the Presidential Secretariat, to review plans for establishing cultural and sports-related foundations and requested support from large corporation chairpersons. Subsequently, the K-Sports Foundation was established, and companies paid a total of 28.8 billion KRW in contributions from February to August 2016. However, after the impeachment of former President Park due to the scandal, the foundation’s establishment permit was revoked. The K-Sports Foundation is currently undergoing liquidation procedures. If all related court rulings are finalized against the foundation, it may return the corporate contributions and then file for bankruptcy.

Reporter Lee Yong-kyung, Law Times

※This article is based on content supplied by Law Times.

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