Daewoo Founder Sentenced for Fraud

Kim Woo-choong, founder of the now-dismantled Daewoo Group, is sentenced to 10 years in jail after being found guilty of charges including embezzlement and accounting fraud.

He was found guilty of fraud in securing bank loans, fabricating financial accounts to falsify assets and embezzlement of company funds.

The Seoul Central District Court also forfeited 21.4 trillion won ($ 22.6 billion) in fines for accounting fraud and other financial irregularities, and also fined an additional 10m won, however, the court cleared him from the charges of bribing politicians and other influential figures to bail out his troubled conglomerate following the 1997-98 Asian financial crisis.

In its ruling the court said, “We find Kim responsible for breaching corporate ethics and orchestrating the country’s largest financial scandal that led the Daewoo group to collapse, forcing many workers out on the street.”

It added, “His irresponsible acts also caused significant damage to the nation’s financial sector that needed a large amount of public funds from taxpayers.”

Kim Woo Choong, 69, had founded the Daewoo Group in March 1967 and turned it into one of the Big Four conglomerates in South Korea, before vanishing in 1999 as his empire was collapsing under the weight of $ 80-billion debts.

Earlier, the industrial and multi-faceted service conglomerate, Daewoo was prominent in expanding its global market through joint ventures all over the world.

In his summing up when sentencing Kim, Judge Hwang Hyun-joo said, “There is a need to show that there is a heavy penalty to pay when you commit acts that betray the trust of economic entities, such as fabricating the accounts or obtaining fraudulent loans.”

Kim returned to South Korea in June last year, saying he desired to make peace with his past. He was taken into custody at the airport upon arrival on a flight from Vietnam.

However, the court did not order to sent Kim back to prison due to the health problems and ordered a suspension of the sentence until July 28. Kim has been hospitalized at Yongdong Severance Hospital in southern Seoul for the heart ailment and other medical problems.
Expressing the disappointment on the ruling, Kim’s attorneys said, “It is frustrating that the court did not consider Kim’s contribution to the development of the economy,” further saying that they will appeal the case.

Kim has one week to file for an appeal, the Seoul court said.