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Dong-A Socio Holdings Chairman Sentenced to 2 1/2 Years in Prison, Fined 13 Bil. Won
For Providing Rebates to Hospitals
Dong-A Socio Holdings Chairman Sentenced to 2 1/2 Years in Prison, Fined 13 Bil. Won
  • By Choi Moon-hee
  • December 27, 2018, 17:35
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Dong-A Socio Holdings chairman Kang Jeong-seok

Dong-A Socio Holdings chairman Kang Jeong-seok, who was put on trial for providing illegal rebates to doctors, was sentenced to prison in the second trial.

The Busan High Court sentenced Kang to two and a half years in prison and 13 billion won in fines on charges of embezzling large amounts of company funds and offering rebates to hospitals and clinics.

The court also sentenced three former officials Dong-A Pharmaceutical Co. to prison terms for helping Kang raise slush funds through illegal means.

Kang was accused of embezzling 52.1 billion won (US$46.5 million) from the former Dong-A Pharmaceutical Co. between 2007 and 2001 and using the money to provide kickbacks to hospitals and clinics.

The court only recognized 416 million won out of the 52.1 billion won that the prosecution claimed Kang had embezzled.

"The defendant is a chief executive who is responsible for taking decisive action to root out the illegal practice of providing rebates to doctors, but he neglected his responsibility and joined the crime of providing rebates with company funds," the judge said.

The court pointed out the lack of self-cleaning efforts in the domestic medical and pharmaceutical community to eradicate the practice of giving and receiving rebates.

"There have long been social demands for eradication of rebates as the practice tends to cause a rise in medicine prices, which in turn increases national burden, and other problems," the judge said.

"Even though the former Dong-A Pharmaceutical had been sanctioned for rebates several times by investigation agencies and the Fair Trade Commission, it has showed no willingness to root out the practice fundamentally,” the judge said.

Dong-A Pharmaceutical, which was established in 1949, changed to holding company on March 4, 2013 and changed its name to Dong-A Socio Holdings. It controls two key affiliates, Dong-A Pharmaceuticals, which produces and sells ordinary pharmaceuticals, and Dong-A ST, which produces specialty drugs and medical equipment and carries out overseas business.