hankyoreh

Sept. 12. (by Lee Jeong-a

By Kim Seon-sik and Kim Hyo-shil, staff reporters

CJ Group chairman Lee Jay-hyun was sentenced to three years in prison by an appeals court on charges of over 160 billion won (about US$150 million) in tax evasion, breach of trust, and embezzlement.

The court took one year off the original sentence after Lee was acquitted on one of the charges, and the 54-year-old avoided court custody because his ill health qualified him for an arrest suspension.

The tenth criminal division of Seoul High Court, under Hon. Kwon Ki-hoon, sentenced Lee on Sept. 12 to three years in prison and a fine of 25.2 billion won (US$24.3 million). Lee had originally been sentenced to four years in prison for evading tens of millions of dollars in taxes through a slush fund valued in the hundreds of millions, a violation of the Act on the Aggravated Punishment, etc. of Specific Crimes. The court also ordered Lee to pay 25 million won (US$24,100) for each day the fine goes unpaid.

“The amounts involved in the tax evasion and the damages from embezzlement and breach of trust are very large, and the nature of the crime was particularly severe, as it involved use of an offshore ‘paper company’ that is difficult to track,” the court said. “Also, because embezzlement and breach of trust are inimical to the aims of the company system that forms the underpinnings of the market economy, severe punishment is unavoidable.”

At the same time, the court also said its sentence “took into account the fact that Mr. Lee’s health is not good, and that he paid the evaded taxes in full.”

The court ultimately decided to extend the arrest suspension granted to Lee on Aug. 21 because of his current treatment regime after undergoing a kidney transplant. The suspension for Lee, who is currently undergoing treatment at Seoul National University Hospital, remains in effect until 6 pm on Nov. 21.

Lee was found guilty of administering CJ stocks with securities accounts in the names of some 400 group employees and transferring shares of offshore affiliation to his own paper companies, as well as avoiding over 25.1 billion won (US$24.2 million) in capital gains, comprehensive income, and corporate taxes through a slush fund formed by siphoning off corporation money.

But the court did acquit Lee of embezzlement for the appropriation of over 60 billion won (US$57.8 million) in CJ funds while forming slush funds between 1998 and 2005, citing a “lack of evidence that the aim was to take possession illegally.” The decision reduced the total amount of the embezzlement conviction by 60 billion won from the first trial.

After the sentencing, the CJ Group expressed “great dismay that [Lee] was sentenced to prison time in spite of his serious health problems.”

It also said it would pursue “another court decision through an appeal.”

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