The suspended sentence for Vice Chairman Lee Sang-woon, who was brought to trial on charges of involvement in Hyosung's alleged wrongdoing including tax evasion, has been finalized. A final judgment came only after 12 years since prosecutors filed the indictment. Honorary Chairman Cho Suck-rai, who was indicted along with Lee, died in Mar. 2024 and the charges were dismissed.
The Supreme Court's Second Division (Presiding Justice Eom Sang-pil) on the 10th upheld the lower court ruling that sentenced Lee to two years and six months in prison, suspended for four years, on charges including violating the Commercial Act (illegal dividends).
The late Honorary Chairman Cho and Vice Chairman Lee were accused of evading 123.7 billion won in corporate taxes through 501.0 billion won in accounting fraud over 10 years starting in 2003, and of evading a little over 11.0 billion won in capital gains taxes by trading shares worth several hundred billion won under borrowed names.
They were also accused of siphoning off 69.8 billion won from Hyosung's overseas subsidiaries through a Hong Kong paper company, and causing 23.3 billion won in losses to the company by using funds from Hyosung's Singapore subsidiary to forgive the Hong Kong paper company's lending debt. Prosecutors sent them to trial in Jan. 2014.
At the first trial and on appeal, Honorary Chairman Cho was sentenced to three years in prison, and Vice Chairman Lee to two years and six months in prison, suspended for four years. In Dec. 2020, the Supreme Court overturned the appellate ruling that had found part of the corporate tax evasion charges guilty and the illegal dividends charges not guilty, and remanded the case to the Seoul High Court.
The Supreme Court said, "Because the tax authorities canceled the corporate tax assessment for the 2008 fiscal year, the crime of tax evasion premised on a tax debt does not stand," adding, "When there are no distributable profits in the 2007 fiscal year but dividends are paid due to financial statements being cooked, the illegal dividends offense applies absent special circumstances."
The remand court followed the Supreme Court's guidance last December but imposed the same sentence as the pre-remand appellate court. For Honorary Chairman Cho, who died during the remand proceedings, it dismissed the indictment.
Both prosecutors and Vice Chairman Lee filed a further appeal, but the Supreme Court affirmed the sentence, saying there was no misunderstanding of the law in the remand judgment.