An appeals court upheld the four-year prison term imposed by a lower court for embezzling nearly 50 billion won (US$46.7 million) of company funds from group affiliates to make personal investments in stock futures and options. The court also overturned the acquittal of SK Group Vice-Chairman Chey Jae-woo, who was similarly charged but found innocent in the lower court. Chey Jae-woo was sentenced to three years and six months in prison and was put under court custody.
The final verdict for the SK case will be decided in the Supreme Court. The results of the investigation of former SK Shipping advisor Kim Won-hong, who was extradited to Korea on September 26, will become an important factor in the final verdict.
“The defendants embezzled funds from SK Group affiliates to fulfill vain and greedy desires. The nature of this crime is extremely offensive,” said the Judge in the ruling of Chairman Chey and Vice-Chairman Chey, who were charged with embezzlement.
In particular, the reason for overturning the acquittal of Vice-Chairman Chey in a lower court was mainly because his reversal of testimony was not accepted. Vice-Chairman Chey admitted embezzlement in the first trial, but reversed his testimony in the appeals court. He stated that he made a false confession in admitting to colluding with former Benex Investment Chairman Kim Jun-hong to deliver the advance payments of 45 billion won (US$41 million) from affiliates to the former SK Shipping advisor and the brothers’ stock futures and options investment advisor Kim Jun-hong. He also did not order affiliates to invest in the fund.
However, the court decided that Vice-Chairman Chey made a false confession to protect his brother, and found the confession from the first trial more trustworthy.
The court sentenced time in prison for Vice-Chairman Chey and put him in immediate court custody, saying that Chey is a flight risk. Vice-Chairman Chey promised not to run and requested release but, it was denied.
The court rejected the Chey brothers’ request to postpone the ruling until former SK Shipping advisor Kim is extradited to Korea.
Based on Kim’s recorded tapes and evidence submitted during the trial process, the court found him untrustworthy.
In October 2008, Chairman Chey was charged with embezzling 49.7 billion won (US$46.2 million) of advance payments from SK Telecom and SK C&C (embezzlement by Special Criminal Acts). Vice-Chairman Chey was charged for ordering the wiring of these funds to former SK Shipping advisor Kim, who was staying overseas, for investment in stock futures and options.