[비즈한국] Former Kumho Asiana Group (now Kumho Group) Chairman Park Sam-koo has received a suspended sentence in his second trial. While the first trial court found the former chairman guilty of embezzlement and breach of trust, the second trial court found him not guilty of most of those charges, convicting him only of violating the Fair Trade Act. The business community is keeping a close watch on the former chairman’s future moves. Prevailing opinion suggests that an immediate return to management is unlikely, given the possibility of a prosecution appeal and Park's advanced age.
The Seoul High Court’s Criminal Division 2 sentenced former Chairman Park Sam-koo to two years and six months in prison, suspended for four years, on the 18th. The former chairman faced charges including embezzlement under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, for which he was sentenced to 10 years in prison during the first trial. However, Park has been out on bail since January 2023 during the second trial process and has been standing trial while not in custody.
Specifically, Park Sam-koo was charged with: withdrawing 330 billion won from Kumho Group affiliates to use for the acquisition of Kumho Industrial; selling a 100% stake in Kumho Terminal held by Asiana Airlines020560 to Kumho Corporation (now Kumho Express) at a low price; and selling Asiana Airlines' exclusive in-flight catering rights to the Swiss Gate Group at a discount. While the first trial court found him guilty on most of these counts, the second trial court acquitted him of them.
However, the second trial court found him guilty of Fair Trade Act violations, such as arranging for the Gate Group to acquire 160 billion won in bonds with warrants (BW) issued by Kumho Corporation interest-free, and unfairly supporting Kumho Corporation with 130.6 billion won in low-interest loans via affiliates. Regarding the unfair support charges, the court ruled, "It can be evaluated that unfair benefits were provided to maintain and strengthen former Chairman Park Sam-koo's control over the group, and that there was unfair support allowing Kumho Corporation to enjoy favorable competitive conditions."
With a suspended sentence, restrictions on Park Sam-koo’s activities have been eased. Under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, individuals convicted of embezzlement or breach of trust are barred from employment at related companies for five years from the date their prison sentence concludes or is finalized. However, as the second trial court acquitted him of the embezzlement and breach of trust charges and only convicted him of Fair Trade Act violations, a return to management for the former chairman has become possible.
The companies where Park Sam-koo can exert influence are Kumho Express and Kumho Engineering & Construction. The former chairman owns a 45.43% stake in Kumho Express, and Kumho Engineering & Construction is a subsidiary of Kumho Express. Kumho Engineering & Construction has shown significant presence in the construction industry, recording 999.2 billion won in revenue for the first half of this year.
However, experts suggest the likelihood of Park Sam-koo returning to management immediately is low due to the possibility of a prosecution appeal. Furthermore, given that he was born in 1945 (80 years old), some speculate he may focus on succession planning rather than returning to management. His eldest son, Park Se-chang, Vice Chairman of Kumho Engineering & Construction, is involved in management but holds the status of a non-registered executive.
Most importantly, the issue of equity succession must be resolved. Gifting the 45.43% stake in Kumho Express held by Park Sam-koo to Vice Chairman Park Se-chang would incur a massive gift tax. As Kumho Express is a private company, its exact corporate value is difficult to determine. However, considering that the former chairman purchased Kumho Express shares at 101,079 won per share in October 2020 and the total number of issued shares is 2,410,700 (including common and preferred shares), the corporate value is approximately 243.6 billion won. Since Kumho Express's recent revenue is higher than in 2020, its current value is expected to be higher.
Under current law, a 50% tax rate is applied to the inheritance or gifting of stocks exceeding 3 billion won. Therefore, if Vice Chairman Park Se-chang were to be gifted the former chairman's stake, he would have to bear a gift tax exceeding 100 billion won. Bizhankook reached out to Kumho Engineering & Construction for comment regarding this matter, but did not receive a specific statement.