SK Telecom Chairman Convicted of Financial Fraud
Published on: 1st Feb 2013
Note -- this news article is more than a year old.
The Chairman of South Korea's SK Telecom Chey Tae won has been jailed for four years after being found guilty of stealing USD46 million from company accounts for his personal investments.
"As the head of SK, which has a large influence on the nation's economy, Chey Tae-won should be an example of corporate governance and transparency," Judge Lee Won-beom said in the ruling.
"But instead [he] embezzled several tens of billions of won in affiliates' funds and tried to pass on the responsibility to the other defendants."
A representative for Mr Chey Tae-won said that he would appeal the verdict.
This is the second time that he has been sentenced, having been handed a three-year suspended sentence in 2003 for accounting fraud. On this latest occasion, a four-year sentence represents a tougher decision by a South Korean court, especially as the courts have historically showed leniency towards Korea's "chaebol" leaders in light of their contribution to the economy.
Fitch Ratings said that even if Mr Chey does serve the full four years, they do not expect any major change to the management and operations of the SK Group companies (including SK Telecom and SK Innovation). Mr Chey's family will still be able to exercise their control and voting rights at all group company board meetings and shareholder meetings.
There is also no bar on a person convicted of financial fraud from returning to run the same company later.
Fitch warned that while the sentence shows the courts are getting harsher, on their own that will do little in the short term to change Korea's weak corporate governance culture.