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(3rd LD) Seoul court hands down suspended jail term for former Samsung Group chairman
By Kim Hyun
SEOUL, July 16 (Yonhap) -- Former Samsung Group chairman Lee Kun-hee avoided a prison sentence on Wednesday when a Seoul court convicted him of tax evasion but dismissed more serious charges of breach of trust in a trial that forced the tycoon to resign.
"It is difficult to say that the defendant committed breach of trust" in connection with the murky transfer of corporate control to his son and heir apparent, Jae-yong, said Judge Min Byeong-hoon of the Seoul Central District Court.
Lee, 66, however, is guilty of tax evasion, the judge said, sentencing him to three years in jail with a five-year suspension. He was also fined 110 billion won (US$109 million).
Civic activists immediately denounced the court ruling as "shameful."
A special prosecutor had demanded seven years in jail and a 350-billion-won fine for Lee, who quit his job of 20 years following his indictment in April.
In an independent probe sanctioned by parliament, special prosecutor Cho Joon-woong charged Lee with evading 112.8 billion won of taxes by hiding assets under borrowed-name stock accounts between 2000-2006 and orchestrating the controversial wealth transfer in the mid-1990s.
In the father-to-son transfer, Jae-yong acquired convertible bonds of the theme park Everland, Samsung's de-facto holding company, and shares of other Samsung affiliates at "remarkably low" prices, the prosecutor said. The bargain takeover helped him acquire group control without paying taxes while causing tremendous losses to shareholders, he said.
The court said, however, the losses of Everland shareholders do not constitute breach of trust by Lee.
Seven other Samsung executives also received suspended sentences or were acquitted, with former Vice Chairman Lee Hak-soo given a two-and-a-half-year jail term, suspended for five years, and fined 60 billion won.
The verdict drew rounds of applause in the packed courtroom.
"I apologize to the people, particularly to journalists, for causing this trouble," Lee said with a look of relief as he left the courtroom.
There was no immediate word from the special prosecutor, who did not attend the ruling. But he was expected to appeal.
Civic activists criticized the verdict as backward. It reversed Korea's decade-long efforts to increase transparency in family-controlled conglomerates and cleared the way for other tycoons to transfer their wealth to their children without paying taxes, they said.
"This is a shameful ruling," Kim Sang-jo, a trade professor at Hansung University, said.
"With this ruling, any corporate heads can transfer their shares at a remarkably low price to their children without paying a single penny of tax. The judiciary, which is responsible for preventing this breach of duty practice, is actually inciting it. I'm dumbfounded," Kim said.
Critics also noted that Wednesday's verdict was at odds with another court verdict. An appeals court has found Samsung's father-to-son wealth transfer illegal and convicted two Samsung executives of breach of trust for engineering it. The case now awaits the Supreme Court's ruling.
The Seoul district court has previously sought jail terms for corporate heads. Hyundai Motor Chairman Chung Mong-koo was sentenced to three years in jail by the court for embezzlement, even though it was reduced to a suspended sentence in an appeals court. Hanwha Group Chairman Kim Seung-youn received a year-and-a-half prison term for violence before it was suspended in the high court.
The high-profile probe into Samsung started after a former Samsung lawyer raised corruption allegations against Lee.
"I have nothing to say. It's disappointing," the whistleblower, Kim Yong-chul, said after the ruling.
hkim@yna.co.kr
(END)
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