* SK Holdings chief Chey receives 4-year prison term
* SK Group says to appeal against the ruling
* President-elect says powerful and rich can't skirt law
* SK Holdings shares close down nearly 3 pct prior to ruling
(Adds more details, SK comments, background)
By Joyce Lee and Daum Kim
SEOUL, Jan 31 SK Holdings Co Ltd's
Chairman Chey Tae-won was jailed for four years on embezzlement
charges, a Seoul court ruled on Thursday, after South Korea's
president-elect vowed tougher action against corrupt business
Chey, who stepped down in December from his position as
chairman of the country's third-largest conglomerate SK Group,
was sent straight to prison.
The ruling followed a court decision last August when Hanwha
Chairman Kim Seung-youn was sentenced to four years in jail, and
taken directly to prison.
Until then, heads of the major family-owned "chaebol" such
as Samsung, Hyundai, SK and Hanwha who were convicted of crimes
received only suspended sentences, followed by presidential
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
"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 ... but instead embezzled several
tens of billions of won in affiliates' funds and tried to pass
on the responsibility to the other defendants," Judge Lee
Won-beom told a packed courtroom.
The Seoul Central District Court ruled that the SK Holdings
chairman embezzled nearly 50 billion won ($46 million) in
corporate funds of SK affiliates for his personal use.
The court cleared his brother, SK Holdings vice chairman
Chey Jae-won, of all charges.
The firm is the holding company of 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 percent before
the ruling was announced.
A SK Group spokeswoman said Chey Tae-won would appeal the
"After a thorough review of the ruling, (SK) plans to take
legal steps to prove (Chey's) innocence," the group said in a
In 2003, Chey was found guilty of orchestrating a $1.2
billion accounting fraud at SK Networks Co Ltd, the
group's trading arm. He later received a suspended jail term.
STOP SKIRTING THE LAW
Thursday's ruling underlined a shift in treatment for the
chaebol, a hot-button issue in last year's presidential and
Outgoing President Lee Myung-bak, himself a former chaebol
chief executive, was widely criticised during his five-year term
for his favourable treatment of the chaebol.
President-elect Park Geun-hye, whose term begins in late
February, vowed to level out the playing field between the
chaebol and the "economically weak".
She pledged to outlaw suspended sentences for embezzlement
and other common chaebol offences, and to restrict presidential
pardons for controlling shareholders and executives of
"In the past, there were many cases of skirting the law
despite being guilty because they were powerful or rich ... The
people's trust in the fairness of the law cannot be let down,"
Park said on Tuesday.
Chey had stepped down from his position as SK Group chairman
in December but remains chairman and CEO of SK Holdings, SK
Innovation and SK Hynix.
Chey also controls the telecom-to-oil SK Group through his
controlling stake in SK C&C, which is the largest
shareholder in SK Holdings.
($1 = 1085.4750 Korean won)
(Reporting by Joyce Lee; Editing by Edmund Klamann and Jeremy