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(LEAD) Former STX chief gets 6-year jail term for corporate crimes

2014/10/30 15:13

SEOUL, Oct. 30 (Yonhap) -- A Seoul court on Thursday sentenced the former head of the financially troubled shipping and shipbuilding conglomerate STX Group to six years behind bars for a host of corporate crimes.

Kang Duk-soo, who headed the group from 2003 to February 2014, was convicted of diverting funds of STX Heavy Industries Co., a troubled shipbuilder unit, to illegally support other ailing affiliates, mostly STX Construction Co., by cooking accounting books.

Seoul Central District Court also found Kang guilty of embezzling company funds to invest in his personal firm by setting up a paper company and creating a secret fund by inflating salary figures paid to company executives.

"Kang inflicted huge losses on financial institutions through accounting fraud that threaten trust and transparency of the capital market," Judge Kim Jong-ho said in his ruling.

Prosecutors had initially sought a 10-year prison term for the disgraced businessman and accused him of orchestrating the corporate crimes of nearly 2.6 trillion won (US$2.4 billion).

The court, however, only found the 64-year-old former chairman guilty of the accounting fraud worth 584.1 billion won and embezzling 67.98 billion won.

STX Group, once the country's 11th-biggest conglomerate with 10 affiliates under its wing, has seen its major affiliates struggle from liquidity shortages and mounting debt due to a downturn in the shipbuilding and shipping sectors.

Kang, who began his career as a salaried worker at a cement company, expanded STX Group into one of the country's biggest conglomerates through corporate mergers and acquisitions.