Updated February. 28, 2014 05:40
The Korean business community was shocked after the Supreme Court sentenced 48 months in prison to SK Group Chairman Chey Tae-won and 42 months to SK Group Senior Vice Chairman Chey Jae-won, his younger brother, for embezzlement Thursday. The four-year jail term to the chairman of the SK Group, Koreas third largest conglomerate, is the strongest punishment among court decisions to the chairmen of conglomerates. It is rare that a court rules a real prison term to the heads of conglomerates.
After being prosecuted for siphoning off 46.5 billion won (43.5 million U.S. dollars) of SK group assets overseas and investing the money in options and futures, Chairman Chey was jailed at the first trial, which sentenced him to four years in prison. The Supreme Court did not accept his lawyers claim that additional hearings are needed to find substantial truth. The Supreme Court decides whether the lower court made the correct application and interpretation of law in its ruling, and does not cut the sentence if it is 10 years or less.
The ruling reflected that the judiciary branch has a strong will to punish corporate crime and eliminate the controversy over the claim that the rich are not punished while only the poor are punished. According to the statistics released by the Supreme Court Sentencing Committee, rulings have been 96.7 percent in compliance with the guideline on sentencing in 2009 and 94.3 percent in 2010. It is a step in the right direction that they get rid of the wrong practice of not punishing the wealthy. They should be also careful not to give heavier sentences to the owners of conglomerates just because of the public sentiment.
If a chairman who has strong presence in his conglomerate is absent for a long time, this could lead to the disruption of business operations. For this reason, the SK Group also faced difficulties when it needed to make important business decisions such as launching a new business or a large-scale M&A. The prison term to the Chey brothers could be a crisis to the SK Group. However, as the conglomerate is neither a one-man business nor a mom-and-pop store, professional managers should prove the power of SK.
Whenever a corruption scandal breaks out, conglomerates used to ask for a favorable decision by saying, Please consider the impact on the national economy. The first trial court said, We oppose that the impact on the business community is a major rationale behind mitigating the defendants criminal liabilities. The higher court and the Supreme Court also made the same decision. Businessmen should not expect tolerance to corporate corruption anymore and should abide by laws. Unnecessary regulations that curb business activities must be removed, but those days are over when courts tolerated the illegal activities of the leaders of conglomerates because of their contribution to the national economy.