Chair Cho Hyun-bum of Hankook & Company, who was indicted on charges of embezzlement and breach of trust totaling about 20 billion won, had his sentence reduced on appeal and was sentenced to two years in prison. The appellate court found some of the breach of trust charges not guilty, differing from the first trial.
The Criminal Division 13 of the Seoul High Court (Presiding Judge Baek Kang-jin) overturned the first-instance ruling that sentenced Chair Cho to three years in prison on charges of embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes and sentenced him to two years in prison.
Citing the fact that in Nov. 2020 Cho received a finalized sentence of three years in prison, suspended for four years, for bribery in breach of trust and other charges, the court set the sentence by distinguishing between crimes committed before and after that ruling was finalized. For some breach of trust charges before the finalized ruling, it maintained the six-month prison term as in the first trial, and for the remaining charges deemed committed afterward, it reduced the first trial's two years and six months to one year and six months.
On appeal, the court found not guilty—contrary to the first trial—on the breach of trust charge that, despite knowing that Hyundai Motor partner Rihan was in poor financial condition, 5 billion won from Hankook Tire affiliate Korea Precision Works (MKT) was lent without collateral based on personal ties. The court prefaced that it was hard to see this as meeting a sound business judgment given that Rihan was a company run by an acquaintance rather than an affiliate, but, considering procedural issues such as the "one-day decision-making" pointed out by the first trial, it held that it was difficult to immediately deem it an unlawful breach of trust.
For the remaining counts, the court did not accept the appeals by prosecutors or by Cho and upheld the first-instance findings.
The charge that Hankook Tire unfairly supported an affiliate by purchasing tire molds worth about 87.5 billion won from MKT between Feb. 2014 and Dec. 2017 at higher prices than other manufacturers was found not guilty, as in the first trial. MKT is known as a company in which Hankook Tire and Cho, as well as Cho's older brother, hold most of the equity, and prosecutors estimated that Hankook Tire suffered 13.1 billion won in losses from this transaction.
The charge of occupational breach of trust that Cho, in collusion with an affiliate executive, a person surnamed Park, purchased or leased five vehicles for personal use under an affiliate's name and used a corporate credit card for personal expenses was upheld as guilty. The court said, "It is clear that procedures were ignored and improper interests were pursued," noting the need to improve compliance awareness and corporate culture and stating that a return to management would be inappropriate.
In the first trial, the court found guilty the embezzlement and breach of trust charges amounting to about 7 billion won, sentenced Cho to three years in prison, and took him into custody in court while he had been out on bail.