Hyundai’s Boss Gets Three Years

from BBC News

The chairman of Hyundai Motor Company, one of South Korea’s biggest firms, has been sentenced to three years in jail for embezzlement and breach of trust.

Chung Mong-koo, 68, was accused of amassing a multi-million dollar slush fund for personal use and to pay lobbyists and politicians.

A spokesman for South Korea’s top auto maker said the ruling was disappointing and that an appeal would be filed.

The court allowed Chung to remain on bail while he fights the appeal.

Before the verdict, analysts said the conviction could harm South Korea’s car sector and the wider economy.

More here.

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4 Responses to Hyundai’s Boss Gets Three Years

  1. Shawn Caltagirone October 17, 2015 at 1:42 pm #

    Chung should be imprisoned for taking investors money and using it for personal use. Three years is way too light for this type of crime. Even if it helped the economy, what he did was illegal and he betrayed the people that trusted their money with him. If he wasn’t the CEO of a major car corporation he would be facing a significant more time in jail but just because he has money, his punishment will be almost nothing for the crime he committed. A lot of CEO’s do this to investors and it’s sad that the world is coming down to these greedy business owners keeping investment money for themselves. Having a project on the Bernie Madoff fraud I am pretty familiar with this type of situation but Madoff faces 150 years in prison while Chung is only getting three years, even though Chung is on a much smaller scale.
    This is an unethical situation where a CEO took money from people and used it for himself instead of trying to receive returns for all of his clients. Even though he helped the economy, he did it in a criminal way by basically stealing money from people. All of the money he took he should have to pay back before he continues on with his business, and if he can’t pay it back then more years in prison for him. 110 million dollars is a significant amount of money, and the worst part is some of those millions is probably someone’s retirement and now at an older age they have to work low paying jobs just to survive just because some greedy CEO decided to keep it for himself. The end result should be a much larger sentence than 3 years.

  2. Vicki T October 17, 2015 at 2:08 pm #

    White collar crime is such a huge issue in this day and age. The people at the top of the ladder think that they can do whatever they want and get away with it. They fail to realize what they are really putting at stake when they engage in these kinds of behaviors. They always think that they won’t get caught, despite the fact that people get caught doing similar activities all the time. I have always found it ironic when someone with so much money commits such a crime with other people’s money. Chung is accused of embezzling $110 million dollars and found guilty. Despite this, a spokesman for South Korea’s top auto maker claims he intends to file an appeal.

    Unfortunately, the actions of Mr. Chung will trickle down and affect the Hyundai company as a whole since he largely represents the company, but also has had an enormous impact on the South Korean economy. While it is hard to make a decision like this when it will affect countless areas, companies and people, it is important to send the message out to everyone that these actions are absolutely not acceptable under any circumstances . Chung was using other people’s money to pay off politicians and try clear the way for his own son to soon take over the auto group, meanwhile also setting an extremely poor example of how to do business to his son. Chung was using stockholder’s money, invested in the company, for his own unethical and personal missions.

    Originally his sentence was intended to be six years but his previously positive impact on the economy, as well as his involvement in charity, favorably influenced their decision to lighten the sentence to three years. I feel that was very, maybe too, generous of them considering the carelessness of his crime and the consequences that are to follow as a direct result of his poor decisions. In my opinion they should not cut him any slack. He stole and engaged in unethical practices by paying politicians off and there is no explanation to justify that. If anything the government is setting a bad example for anyone watching who might do the same thing.

  3. Alex Vovk October 22, 2015 at 7:03 pm #

    Browsing through the students’ posts on the SW Blog, I came across one comment for the article “Hyundai’s boss gets three years”, published on the BBC News website in February of 2007. The article details the conviction of the chairman of Hyundai Motor Company, one of the largest and more prominent firms in South Korea, and essentially the face of the country, together with companies like Kia Motors and Samsung. Chairman Chung Mong-koo was sentenced to three years in prison on charges of fraud, embezzlement, and corruption. Even disregarding the eventual decision by a judge to reduce the sentence on account of the contributions Mr. Chung has made to the development of South Korean economy, the verdict against a very powerful and politically connected business executive was still seen as an example of the triumph of the rule of law.

    A skeptic that I am, and having seen in the news and read in the printed media how often men of wealth and privilege evade prosecution and effectively get away with their crimes, I decided to follow up on the original story and learn what happened to the convicted chairman of Hyundai Motor Company in the years following his sentencing. As I suspected, the story didn’t simply end with the prison sentence, even though it was reduced from the harsher punishment the prosecutors were asking for. Turns out, only six months after the judge sentenced Chung Mong-koo to three years in prison, following the appeal by his lawyers, another judge had suspended the original sentence and instead ordered community service and a large donation to charity. The Chief Judge who overturned the verdict said that in making his decision he took into consideration the large economic impact that could result from the chairman’s imprisonment. Again, the story doesn’t end here either. A little over a year after the conviction was overturned and Chung Mong-koo was allowed to return to his job at Hyundai Motor Company, South Korean President Lee Myung Bak has granted him and several other high-level executives a special presidential amnesty on Liberation Day, one of the country’s most important holidays, which celebrates Korea’s liberation from Japan’s colonial rule.

    Confirming my skepticism, this example of a rich and powerful business executive who got away with the crime of which he was accused is not an isolated case. After the financial crisis of 2007 – 2008, when the collapse of many large financial institutions was prevented only through the bailouts by national governments and central banks, not a single executive went to jail, not one head of a bank or an investment firm was held accountable for the irresponsible practices and failures in the valuation of risk, regulation and trading of financial instruments related to loans and mortgages, and clear conflicts of interest. The reason no one was charged with fraud or even negligence was that some banks and investment firms directly responsible for the financial crisis were thought as “too big to fail”, and their collapse would result in enormous domino effects throughout the economy and affect not only financial markets, but every industry.

    It is no wonder that after reading over and over how rich and powerful are very seldom held responsible for their criminal or illegal actions, an average person feels that some people are more equal than others, that justice is not blind and impartial, that it can be bought or influenced. Until there is equal treatment of haves and have-nots, not only in the eyes of the law, but also in practice, I will continue to be skeptical when I read articles similar to the one on BBC News site.

  4. Joe Russulle June 14, 2019 at 11:02 pm #

    In general, high ranking company officials hold enough executive power. Moreover, when such companies do not have checks and balances in place to maintain rules and regulations, incidents such as theft, fraud, and embezzlement are more than likely to occur. In the article “Hyundai’s boss gets three years” readers find out that a high ranking chairman was charged and sentenced to three years in jail for embezzlement and breach of trust. Normally sentencing of a convicted individual depends on the case. In China, South Korea and many other parts of Asia, the highest level of capital punishment during the 19th and 20th century involved the death sentence.

    In South Korea, laws and regulations have been enacted to ensure that those found guilty of breaking the law are tried and convicted accordingly. A source reveals that anyone found guilty of embezzlement and breach of trust is punishable by imprisonment for up to five years or a fine of up to KRW15 million (Artice 355, Criminal Code). Moreover, defendants have the right to bail, and will be assessed penalties. There may also be a civil suit between both parties which may require the appropriate jurisdiction and venue. Nonetheless, the arbitrators chosen will be adequately qualified and will comply by the civil code set to govern their country.

    In the case of Chung- Mong-Koo, he most likely did not face the full extent of the law because he was allowed bail while fighting the appeal for his three-year sentence. It is important to note the level of corruption in various countries, according to the Corruptions Perception Index for 2018, South Korea is listed at #45 and has a score of 57/100. Moreover, these officials tend to get away with crimes due to the financial impact. An article by CBS illustrates how fraud, con jobs, theft, and embezzlement apparently cost U.S. taxpayers over $300 billion annually.

    Kennedy, Bruce. “Why white collar criminals often get away”. CBS NEWS. May 11, 2015. (Links to an external site.)Links to an external site.

    Seung-Ho Lee. “Financial crime in South Korea: overview” THOMSON REUTERS: PRACTICAL LAW. Jan. 27, 2017. (Links to an external site.)Links to an external site.

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