An appeals court Wednesday convicted the former head of local shipping and shipbuilding conglomerate STX Group of embezzlement and negligence of duty, but handed down a suspended sentence.
The Seoul High Court sentenced Kang Duk-soo, who headed the group from 2003 to February 2014, to three years in prison, suspended for four years, for diverting funds from STX affiliates to illegally support other ailing firms, mostly STX Construction Co. and his personal firm.
"Considering the size of the crimes and the impact they have on our economy, strong punishment is inevitable but it seems like it was an unavoidable choice (for Kang) in order to revive the group," Judge Kim Sang-joon said.
He was also convicted of other embezzlement charges but the court acquitted Kang of committing accounting fraud citing a lack of evidence.
Prosecutors have indicted Kang for illegally diverting 2.84 billion won (US$24 million) of company funds and cooking the books for over 2.3 trillion won.
STX Group, once the country's 11th-biggest conglomerate with 10 affiliates under its wing, has seen its major affiliates struggle from liquidity shortages and mounting debt due to a downturn in the shipbuilding and shipping sectors.
Kang, who began his career as a salaried worker at a cement company, expanded STX Group into one of the country's biggest conglomerates through corporate mergers and acquisitions. (Yonhap)