Hyundai head convicted for three years for embezzlement

Targeted in 2006 by the Seoul Supreme Public Prosecutor's Office as part of an investigation into embezzling 106 million US dollars from Hyundai to create slush funds, the head of Hyundai Motor, Chung Mong-koo was today sentenced to three years in jail for embezzling funds.

Arrested on 28 April 2006 on charges related to embezzlement and other corruption, Chung Mong-koo, 68, will appeal the sentence, officials at Hyundai Motor said.

Charged for illegally raising a $106 million slush fund from affiliates, he reportedly spent $74.3 million for private and other purposes, including payments to lobbyists for government favors, prosecutors mark.

He was also convicted for causing financial damage on affiliates through questionable deals and arrangements that allegedly protected or boosted the financial interests of his son, Eui-sun and himself.

However, Chung will remain free on bail for the time being and doesn't face immediate arrest.

Though, prosecutors last month demanded a six-year jail term for Chung calling his alleged crimes "grave", but Judge Kim Dong-oh sentenced a lesser term recalling Chung’s “big contributions to the development of the country's economy".

Meanwhile, three other Hyundai officials facing similar charges were also convicted but all given suspended sentences.

The verdict is likely to hurt Hyundai's image and business activity in the near term, market analysts predict. Shares of the company fell 2.6 percent on the news to $72.60.

Chung Mong-koo graduated from Hanyang University in 1967. He took over as head of Hyundai, succeeding his father and founder Chung Ju-yung in 1999.

He was named by Business Week as one of the top managers for 2004.

About Hyundai

Founded in 1967 by Chung Ju-Yung, Hyundai Motor Company is a division of the Hyundai Kia Automotive Group. It is the leading car maker in South Korea and ranks No.6 in the world.

Headquartered in Seoul, South Korea, the company is capable of producing 1.6 million units annually.

The Hyundai logo, a slanted, stylized 'H', is symbolic of two people (the company and customer) shaking hands and its official global tagline slogan is "Drive your way". Hyundai means "modernity" in the Korean.