CJ head sentenced to 4 years in prison
CJ Group Chairman Lee Jay-hyun leaves Seoul Central District Court in southern Seoul, Friday, after being sentenced to four years in prison and fined 26 billion won. He didn’t answer reporters’ questions. / Korea Times photo by Bae Woo-han
By Kim Da-ye
CJ Group Chairman Lee Jay-hyun was sentenced to four years in prison and fined 26 billion won, Friday, after being found guilty of tax evasion and embezzlement.
The Seoul Central District Court said Lee, chairman of the entertainment and food giant, avoided paying taxes on capital gains from an overseas paper company, Tiger Galaxy, and on shares he hid under his employees’ names.
The court also concluded Lee embezzled more than 60 billion won from the company to create a slush fund.
Lee wore a mask with a wool hat and thick coat in court and was in a wheelchair.
His lawyer told reporters that he will appeal the decision, claiming that the money identified as the slush fund had been managed separately but was for the group’s business.
The court didn’t order Lee to be immediately taken into custody because of his health, ruling that he was unlikely to flee considering his social network and physical condition.
The CJ chairman suffered from chronic renal failure and underwent a kidney transplant operation in August 2013.
Lee was indicted and arrested last July for allegedly evading 54.6 billion won in taxes and embezzling 96.3 billion won of company money.
He was also charged with breach of trust worth 56.9 billion won. Prosecutors had demanded a six-year prison term and a fine of 110 billion won.
The court observed that Lee paid all taxes owed on his shares registered under other people’s names and has not owned stock under false names since then.
“Lee owned the shares under others’ names to maintain control of CJ Group when it was separating from Samsung Group. It wasn’t just for evading taxes,” the court said.
It added that Lee also had not created a slush fund since 2006. He spent part of the slush fund and his own money to pay some 40 billion won in bonuses to employees.
This week, the suspended three-year jail term with 300 hours of community service was given to Hanwha Group Chairman Kim Seung-youn who was found guilty of breach of trust and embezzlement.
Hanwha was caught by surprise at the lighter than expected sentence. The firm is waiting for the prosecution to file an appeal against the sentence by the Seoul High Court, after the Supreme Court sent the case back to it.
SK Chairman Chey Tae-won is awaiting a ruling on his case expected this month.