By Kim Rahn
Staff Reporter
A Seoul court sentenced Koo Bon-ho, a third generation scion of LG Group's founding family, to three years in jail and fined him 17.2 billion won ($13 million) after finding him guilty of stock price rigging, Thursday. Despite the conviction, the court granted him bail while he appeals.
Koo, the largest shareholder of Red Cap Tour and a cousin of LG Group Chairman Koo Bon-moo, was indicted on charges of reaping 16.5 billion won in illegal gains after spreading false rumors about the issuance of new shares after he acquired Kosdaq-listed firm MediaSolution and that he was merging it with his logistics company, Pan Korea Express, in September 2006.
``Koo used Pan Korea Express' funds in purchasing MediaSolution, and employees there were forced to take part in the breach of trust because they could not disobey Koo's orders. He also manipulated stock prices by filing a false public notice, causing losses to other retail investors,'' the court said. ``He led the irregularities and reaped the benefits of the stock rigging.''
The court also handed down a five-year suspended jail term to Cho Poong-eon, a Korean-American lobbyist who colluded with Koo in the stock rigging scheme. Cho was also indicted for bribing government officials to help prevent Daewoo Group from going bankrupt and to keep former Daewoo Chairman Kim Woo-choong out of jail in 1999, as well as hiding Daewoo Information Systems' shares, worth 8.1 billion, to prevent Kim's fortune from being confiscated in 2001.
The court said the stock was hidden through a paper company. ``Cho manipulated stock prices with Koo and took some of the gains. Even though he was not the main player, he took illegal gains by faking stock deals,'' it said.
But it found Cho not guilty of bribery. ``The testimony that Kim gave Cho money in exchange for lobbying was unreliable,'' the court said.