SK Holdings chief jailed as S. Korea gets tough on chaebol

SEOUL (REUTERS) - SK Holdings Co Ltd's chairman Chey Tae Won was jailed for four years on embezzlement charges, a Seoul court ruled on Thursday, underscoring South Korea's tough stance against crimes by business leaders and its family-owned "chaebol" conglomerates.

Chey was sent straight to prison.

The chaebol have been credited with leading the rapid growth of Asia's fourth-largest economy but have come under increasing criticism for lack of transparency and poor corporate governance, as well as their overt influence over politics and society.

The Seoul Central District Court ruled on Thursday that SK Holdings Chairman Chey Tae Won embezzled nearly 50 billion won (S$56.5 million) in corporate funds of SK affiliates for personal use.

The court, however, cleared his brother, SK Holdings vice chairman Chey Jae Won, of all charges.

The firm is the holding company of the country's third-largest conglomerate SK Group, which includes the country's largest oil refinery SK Innovation, and biggest mobile carrier SK Telecom. It also controls chipmaker SK Hynix through SK Telecom.

Shares in SK Holdings closed down nearly 3 per cent before the ruling was announced.

An SK spokesman could not be reached for immediate comment.

In 2003, chairman Chey was found guilty of orchestrating a US$1.2 billion (S$1.5 billion) accounting fraud at SK Networks Co Ltd, the group's trading arm. He later received a suspended jail term.

The ruling also was foreshadowed in August, when a South Korean court handed Hanwha Chairman Kim Seung Youn a four-year sentence and sent him directly to prison.

Until then, heads of major chaebol such as Samsung, Hyundai, SK and Hanwha had been convicted of crimes but given suspended sentences, followed by presidential pardons.