By Lee Hyo-sik
Concerns are growing over the future of CJ Group, the food and entertainment-focused conglomerate, as its leader's request to be released from jail was denied. With the absence of its chairman Lee Jay-hyun, the group will likely continue to be passive in making new investments or hiring workers, further lagging behind its rivals at home and abroad.
On Sept. 12, Lee was sentenced to a three-year prison term by the Seoul High Court on charges of embezzlement, breach of trust and tax evasion, totaling 166 billion won ($161 million). He was fined 25.2 billion won ($24 million). He was not jailed immediately, however, and granted a temporary parole through Nov. 21 to remain in the hospital for medical treatment.
The appeals court reduced his jail term by one year, considering his deteriorating health and his payment of back taxes. He was indicted in July last year and was given a four-year jail sentence by the Seoul Central District Court in February.
CJ Group said it will appeal the case to the Supreme Court. The group had earlier expected that its chairman would be given a suspended sentence, given his worsening health conditions and petitions filed by his extended family members, including Samsung Electronics Chairman Lee Kun-hee, who is his uncle.
''It is unfortunate that the appeals court handed a jail term, despite the chairman's deteriorating health,'' the group said in a statement. ''It is inevitable that CJ would continue to face difficulties in making timely investments and advancing into new business areas, due to the absence of its leader. We will take the case to the nation's highest court."
Prior to the latest ruling, the group had hoped that the court would hand down a lenient sentence as pan-Samsung families filed a petition, asking for clemency citing the chairman's ill health. Lee is the grandson of Lee Byung-chul, the founder of Samsung Group.
On Aug. 19, Lee Kun-hee and his son Lee Jae-yong, vice president of Samsung Electronics; Lee Myung-hee, the chairwoman of Shinsegae Group; and Lee In-hee, the founder of Hansol Group had signed the petition.
CJ said a collective management body led by Sohn Kyung-shik, who is Lee's uncle by marriage, will continue to fill in during his absence. However, the company has delayed many key business decisions until the chairman returns.
The group invested a total of 2.6 trillion won last year, compared with 2.9 trillion won in 2012. This year's amount is expected to fall below 2 trillion won. CJ had planned to invest 200 billion won to build a logistics hub in North Chungcheong Province for its parcel delivery unit, but has put on hold the project indefinitely.
In addition, CJ CGV, the nation's largest theater operator, has postponed its plan to expand its presence abroad, while CJ O Shopping has put off a plan to acquire a foreign home shopping channel.
CJ said its performance has deteriorated since Lee was absent from management. The company as a whole earned an operating profit of 780 billion won in 2013, down 26 percent from the previous year. Among its subsidiaries, CJ Foodville posted an operating loss of 12.4 billion won last year.
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| Lee Jay-hyun Chairman of CJ Group |
On Sept. 12, Lee was sentenced to a three-year prison term by the Seoul High Court on charges of embezzlement, breach of trust and tax evasion, totaling 166 billion won ($161 million). He was fined 25.2 billion won ($24 million). He was not jailed immediately, however, and granted a temporary parole through Nov. 21 to remain in the hospital for medical treatment.
The appeals court reduced his jail term by one year, considering his deteriorating health and his payment of back taxes. He was indicted in July last year and was given a four-year jail sentence by the Seoul Central District Court in February.
CJ Group said it will appeal the case to the Supreme Court. The group had earlier expected that its chairman would be given a suspended sentence, given his worsening health conditions and petitions filed by his extended family members, including Samsung Electronics Chairman Lee Kun-hee, who is his uncle.
''It is unfortunate that the appeals court handed a jail term, despite the chairman's deteriorating health,'' the group said in a statement. ''It is inevitable that CJ would continue to face difficulties in making timely investments and advancing into new business areas, due to the absence of its leader. We will take the case to the nation's highest court."
Prior to the latest ruling, the group had hoped that the court would hand down a lenient sentence as pan-Samsung families filed a petition, asking for clemency citing the chairman's ill health. Lee is the grandson of Lee Byung-chul, the founder of Samsung Group.
On Aug. 19, Lee Kun-hee and his son Lee Jae-yong, vice president of Samsung Electronics; Lee Myung-hee, the chairwoman of Shinsegae Group; and Lee In-hee, the founder of Hansol Group had signed the petition.
CJ said a collective management body led by Sohn Kyung-shik, who is Lee's uncle by marriage, will continue to fill in during his absence. However, the company has delayed many key business decisions until the chairman returns.
The group invested a total of 2.6 trillion won last year, compared with 2.9 trillion won in 2012. This year's amount is expected to fall below 2 trillion won. CJ had planned to invest 200 billion won to build a logistics hub in North Chungcheong Province for its parcel delivery unit, but has put on hold the project indefinitely.
In addition, CJ CGV, the nation's largest theater operator, has postponed its plan to expand its presence abroad, while CJ O Shopping has put off a plan to acquire a foreign home shopping channel.
CJ said its performance has deteriorated since Lee was absent from management. The company as a whole earned an operating profit of 780 billion won in 2013, down 26 percent from the previous year. Among its subsidiaries, CJ Foodville posted an operating loss of 12.4 billion won last year.
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