Cho Hyun-bum, chairman of Hankook & Company, was sentenced to three years in prison for embezzlement and breach of trust related to work and was taken into custody. This comes two years and two months after he was arrested and indicted by prosecutors in March 2023. Hankook & Company is the holding company for tire manufacturer Hankook Tire & Technology.
On the 29th, the 23rd Criminal Division of the Seoul Central District Court (Director General Oh Se-yong) held a sentencing hearing for Cho's case concerning violations of the Act on the Aggravated Punishment for Specific Economic Crimes (embezzlement and breach of trust), embezzlement and breach of trust in the course of work, violations of the Fair Trade Act, and breach of trust resulting in illegal gains, sentencing him to three years in prison.
Cho's charges can be broadly divided into three categories. There are allegations of breach of trust and violations of the Fair Trade Act for improperly supporting affiliates of which he is a major shareholder. There are also allegations of embezzlement and breach of trust for using company-owned foreign cars and corporate credit cards for personal purposes. In addition, there are allegations of breach of trust and illegal gains resulting from lending affiliate funds to a friend's financially troubled company or entrusting the issuance of tickets for affiliates to that friend's company.
The court also found Cho guilty of breach of trust under the Act on the Aggravated Punishment for Specific Economic Crimes for lending affiliate funds to a friend's company without reasonable debt collection measures. Between 2020 and 2021, he lent 5 billion won from Hankook & Company affiliate funds to a company affiliated with Hyundai Motor, knowing that the company's management situation was poor, which resulted in a loss for the company.
The court further ruled that Cho was guilty of embezzlement and breach of trust for improperly utilizing approximately 580 million won of company funds through a corporate credit card, having a company driver exclusively assigned to his spouse, purchasing or renting five foreign cars under the company name for personal use, and incurring expenses for personal directors and furniture purchases with company funds.
The court also recognized the charge of illegal gains from breach of trust when Cho, upon request from a friend, consolidated the travel agency handling ticket issuance for Hankook & Company affiliates to RedcapTour.
On the other hand, the court ruled Cho not guilty of the charges of breach of trust under the Act on the Aggravated Punishment for Specific Economic Crimes and violations of the Fair Trade Act for improperly supporting affiliates. These charges stemmed from allegations that between February 2014 and December 2017, he had Hankook Tire purchase tire molds worth 87.5 billion won from MK Technology (MKT) at a price 13.1 billion won higher than the market value. Cho holds 29.9% equity in MKT.
In this regard, the court stated, 'The price of the tire molds traded between Hankook Tire and MKT cannot be considered unusual in the industry.'
On this day, the court imposed a prison sentence on Cho and canceled his bail. As a result, Cho was taken into custody. He had been arrested and indicted in March 2023, and later released when his bail was accepted in November of the same year. When the presiding judge asked if he had anything to say, Cho softly replied, 'I am deeply remorseful, and I will continue to reflect on this.'
This case began when the Fair Trade Commission reported Hankook Tire to the prosecution for violations of the Fair Trade Act in November 2022. At that time, the Fair Trade Investigation Division of the Seoul Central District Prosecutor's Office (Director General Lee Jeong-seop), confirmed circumstantial evidence that implicated Cho through additional investigations. In March 2023, prosecutors indicted Cho on charges of embezzlement and breach of trust under the Act on the Aggravated Punishment for Specific Economic Crimes, embezzlement and breach of trust in the course of work, and violations of the Fair Trade Act. Subsequently, in July of the same year, additional charges of illegal gains from breach of trust were brought against him.