'Embezzlement and Breach of Trust' Jo Hyun-beom's Second Trial Begins... "Reasonable Debt Recovery, Not Breach of Trust"

[Financial News] The appeal trial of Jo Hyun-beom, chairman of Hankook & Company Group, who was sentenced to prison in the first trial for charges of embezzlement and breach of trust, has officially begun. Jo's side argues that the loan to Hyundai Motor's partner company Lihan, which was recognized as guilty in the first trial, was a "reasonable debt recovery measure" and not a breach of trust.
Seoul High Court Criminal Division 13 (Presiding Judge Baek Kang-jin) held the first appeal trial on the afternoon of the 9th for Jo, who was indicted for violating the Act on the Aggravated Punishment of Specific Economic Crimes (embezzlement) and other charges. On this day, Jo appeared in court wearing a green prison uniform.
Jo's side argued that the act of lending funds to Hyundai Motor's partner Lihan was wrongfully judged as breach of trust in the original trial because it was lent without collateral due to personal acquaintance. Jo's lawyer emphasized that the instruction to lend funds to Lihan was "conditional," and the asset value of Lihan, held as collateral, was sufficient to recover the principal and interest, amounting to 20 billion won.
The original trial misunderstood Jo's statement to "consider lending money to Lihan" as an "unconditional instruction," and underestimated the value of Lihan's Hwaseong factory, which was presented as collateral.
In response, the court questioned whether the claim that the loan to Lihan was based on personal relations and at the same time a managerial decision could coexist. Jo's side acknowledged that "Hankook Tire and Lihan are not directly intertwined in the supply chain," and explained that "it is not an active managerial decision, but rather that the debt recovery measures were sufficient, so it cannot be constituted as breach of trust."
The court decided to continue hearing Jo's arguments on the remaining issues, excluding the violation of the Fair Trade Act, at 2 p.m. on the 22nd. Previously, the court had announced a swift trial during the pre-trial preparation session, stating that "considering the circumstances of the detained defendant, we will conclude before the detention period expires."
In May, Jo was sentenced to 3 years in prison and detained in court in the first trial. In the same trial, Hankook Tire manager Park was sentenced to 1 year and 6 months in prison with 3 years of probation and 80 hours of community service, while executive Jung and Hankook Tire Corporation were acquitted.
The first trial judged that Jo caused damage to the company by executing a loan of 5 billion won to Lihan without appropriate collateral securing or debt recovery measures. It also recognized as guilty the charges of spending company money on personal home furniture expenses.
However, Jo was acquitted of the charges of unfairly supporting by making Hankook Tire's affiliate MKT (now Korea Precision Works) purchase tire molds at higher prices than competitors, and some charges of breach of trust.
Previously, in 2020, he was sentenced to 3 years in prison with 4 years of probation for receiving kickbacks from partner companies.
 




scottchoi15@fnnews.com Choi Eun-sol Reporter