Former Kumho Group Chairman Park Sam-gu's sentence significantly reduced from 10 years in prison to a suspended sentence... Acquitted of embezzlement and breach of trust (Comprehensive)

Sentenced to 2 years and 6 months in prison, suspended for 4 years... Acquitted of embezzlement and breach of trust under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes

Executives who received prison sentences in the first trial also received suspended sentences or acquittals... Only violations of the Fair Trade Act were recognized

Former Chairman Park Sam-gu attends court (Seoul=Yonhap News) Reporter Shin Joon-hee = Former Kumho Asiana Group Chairman Park Sam-gu, who was indicted on charges of unfairly supporting affiliates and embezzling and breaching trust of hundreds of billions of won, is attending the first trial sentencing at the Seoul Central District Court in Seocho-dong on the 17th. 2022.8.17 hama@yna.co.kr

Former Kumho Asiana Group Chairman Park Sam-gu, who received a prison sentence in the first trial for charges including unfairly supporting his private company by mobilizing affiliates and embezzling 300 billion won of company funds, has received a significantly reduced sentence of a suspended prison term in the second trial.

The Seoul High Court's Criminal Division 2 (Presiding Judge Kim Jong-ho) sentenced former Chairman Park to 2 years and 6 months in prison, suspended for 4 years, on charges of embezzlement and other offenses under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes on the 18th. The first trial had sentenced him to 10 years in prison.

Also indicted were Kumho Group's former Executive Director Yoon of the Strategy and Management Division, who was sentenced to 1 year in prison, suspended for 2 years, and former Executive Director Park of the Strategy and Management Division, who was sentenced to 1 year and 6 months in prison, suspended for 3 years, respectively. Executive Director Kim of the Strategy and Management Division, Finance and Planning, was acquitted. All of them received significantly reduced sentences from the first trial.

Kumho Industrial (now Kumho Engineering & Construction) was fined 200 million won.

Unlike the first trial, which found most of former Chairman Park's charges guilty, the second trial found him guilty only of violations of the Fair Trade Act, such as unfair support, and acquitted him of embezzlement and breach of trust under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, which carry higher penalties.

Regarding the charge of embezzling 330 billion won of funds from four affiliates, including Kumho Terminal, in December 2015, which were used to acquire Kumho Industrial shares held by creditors such as the Korea Development Bank (under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes), the court ruled not guilty, stating, "Although the funds of the victim companies were used to acquire Kumho Industrial shares by Kumho Enterprises (now Kumho Express), which is controlled by former Chairman Park, the provision of funds was made in accordance with a valid asset securitization structure, and the transaction terms, such as repayment period and interest, were in line with normal practices."

It added, "Sufficient collateral was provided for the funds, a concrete and feasible repayment plan was in place, and the principal and interest have all been repaid," and concluded, "It is difficult to determine that there was an intent to illegally appropriate the funds of the victim companies as if they were his own."

Regarding the charge of breach of trust under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes for selling 100% of Asiana Airlines' shares in Kumho Terminal to Kumho Enterprises at a low price in April 2016, the court also ruled not guilty, stating, "The sale price of 270 billion won appropriately reflects the value of Kumho Terminal shares, or at least it was not a price significantly lower than the share value," and concluded, "It is difficult to see that Asiana Airlines suffered any losses from the sale of Kumho Terminal shares."

The charge of breach of trust under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes for selling Asiana Airlines' exclusive in-flight meal business rights to Gate Group in Switzerland at a low price of 133.3 billion won in December of the same year was also dismissed, with the court stating, "It cannot be seen that the exclusive in-flight meal business rights were transferred at a low price, nor can it be said that disadvantageous contracts, such as a minimum profit guarantee for Gate Group, were established during the contract process," and "No losses for Asiana Airlines were recognized."

However, the charge of violating the Fair Trade Act, where Gate Group, in exchange for obtaining the exclusive business rights, acquired 160 billion won worth of convertible bonds (BW) from Kumho Enterprises without interest, was found guilty, with the court stating, "Unfair benefits that strengthened the group's control were provided."

The court found guilty the charge of violating the Fair Trade Act, where former Chairman Park, by mobilizing nine affiliates including Asiana Airlines from 2016 to 2017, unfairly supported Kumho Enterprises with 130.6 billion won at low interest rates without collateral, thereby directing the benefits to himself, a related party of Kumho Enterprises.

The court stated, "It can be evaluated that unfair support was provided, which allowed Kumho Enterprises to enjoy favorable competitive conditions, while at the same time unfair benefits were provided that maintained and strengthened former Chairman Park's control over the group," and ruled that the violation of the Fair Trade Act was established.

Former Chairman Park was indicted in May 2021 on charges including creating a special purpose company (SPC) called Kumho Enterprises, which he wholly owned, to acquire shares of Kumho Industrial, the group's holding company and Asiana Airlines' parent company, in an attempt to regain management control.

In August 2022, the first trial found most of the indicted charges to be guilty and sentenced him to 10 years in prison, taking him into custody.

Former Chairman Park was released on bail (release under conditions such as a deposit) in January of the following year and has been on trial without detention. Yonhap News