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South Korean Court Gives Long Sentences to 7 Ex-Daewoo Executives
A Seoul criminal court sentenced seven former Daewoo executives to prison terms of up to seven years Tuesday on fraud and other charges in connection with the conglomerate's collapse during the 1997-98 Asian economic crisis.
The court also slapped a record fine of $20 billion on the seven, the same amount they illegally obtained in loans from banks by falsifying books. They then diverted the money to a secret overseas Daewoo account.
The ruling closed the first chapter in the government's efforts to punish those who it believes are responsible for the largest corporate bankruptcy ever in South Korea.
The collapse of Daewoo and about a dozen other heavily indebted conglomerates forced South Korea to appeal for a record $58 billion bailout package from the International Monetary Fund in late 1997.
"The defendants should be sternly punished, because they committed grave economic crimes that plunged society into great confusion," senior judge Jang Hae-chang said in issuing the ruling.
"The defendants claim that they, as salaried executives, had no choice but to follow orders from the group owner but they cannot be exonerated, because they cannot escape responsibility to protect minor shareholders," he said.
The Daewoo executives said in court that they were ordered by group owner Kim Woo-joong to falsify books to receive fresh bank loans. After Daewoo collapsed, Kim fled the country in 1999 and his whereabouts are not known.
Government investigators are tracking down billions of dollars Kim allegedly kept in a secret bank account in London.
In Tuesday's ruling, two former presidents of Daewoo Corp. Kang Byong-ho and Jang Byung-joo were sentenced to seven and six years in prison, respectively.
Kim Tae-gu, a former president of Daewoo Motor Co., received four years and Shin Yung-gyun, a former president of Daewoo Shipbuilding and Marine Engineering Co., three and a half years.
Jon Ju-beom, a former head of Daewoo Electronics Co., and Choo Ho-seok, a former chief of Daewoo Heavy Industries, got three years each.
Lee Sang-Hoon, a former executive at Daewoo Electronics Co., got three years.
Thirteen other former executives in the group were also sentenced to one to three years in prison but had their sentences suspended for two to five years.
Daewoo grew from a one-room textile exporter 32 years ago to a conglomerate with $65 billion in assets before its collapse.
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