Hyundai Motor Boss Gets Three Years For Huge Slush Fund

Feb. 5, 2007
Chung Mong-Koo found guilty of embezzling $96 million.

The head of South Korea's largest automaker Hyundai Motor was sentenced on Feb. 5 to three years in prison for creating a multi-million dollar slush fund to bribe politicians and officials. Chung Mong-Koo, 68, was found guilty of breach of trust and of embezzling around 90 billion won ($96 million) through fraudulent accounting, in what a Seoul court called a "clear-cut criminal act."

His lawyers had urged leniency, saying putting him behind bars could do further damage to the Hyundai auto group -- the world's sixth-largest automaker -- and hurt the national economy. The group, which includes affiliate Kia Motors, controls 70% of the domestic auto market and accounts for 5.4% of South Korea's gross domestic product.

But chief judge Kim Dong-Oh said Chung's behavior had dealt a blow to corporate self-regulation. "The court cannot help but sternly hold him responsible," the judge said. "Wrong customs must be eradicated to make the South Korean economy advanced."

It passed suspended jail terms on three other Hyundai Motor executives, including vice chairman Kim Dong-Jin, saying they were just following Chung's instructions.

Cho Chul, an auto industry analyst at the Korea Institute for the Economy and Trade, said the sentence "will have a negative impact on Hyundai Motor's drive to boost its corporate image among consumers and the quality of its products under Chung's leadership."

Copyright Agence France-Presse, 2007

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