July 16, 2008

South Korea: Former Samsung Group Chief Handed Suspended Jail Term

Text of report in English by South Korean news agency Yonhap

[By Kim Hyun: "Seoul Court Hands Down Suspended Jail Term For Former Samsung Group Chairman"]

Seoul, July 16 (Yonhap) - A court handed down a suspended prison sentence to former Samsung Group chairman Yi Ko'n-hu'i [Lee Kun- hee] for tax evasion on Wednesday, dismissing more serious charges of breach of trust in a trial that has forced the tycoon to resign.

"It is difficult to say that the defendant committed breach of trust" in connection with the murky transfer of his 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.

A special prosecutor had demanded seven years 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 (US$111.9 million) of taxes by hiding assets under borrowed-name stock accounts between 2000-2006 and orchestrating the controversial wealth transfer in the mid-1990s.

The verdict, in favour of Samsung, drew rounds of applause in the packed courtroom, but civic activists called it "shameful." The ruling reversed South Korea's decade-long efforts to increase transparency in family-controlled conglomerates and reform the top- down management structure, which started after the 1997-98 Asian financial crisis hit the country, said Kim Sang-jo, a trade professor at Hansung University.

"This is a shameful ruling. With this, Korean society will have to pay even more than it has during the past 10 years," Kim said.

Originally published by Yonhap news agency, Seoul, in English 0522 16 Jul 08.

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