A Seoul court on Friday sentenced CJ Group chairman Lee Jay-hyun to four years in prison for embezzlement and tax evasion.
Lee Jay-hyun was found guilty of misappropriating 165.7 billion won ($156 million) in company assets to offshore slush funds and dodging taxes in the process. In the same ruling, the Seoul Central District Court also ordered the 54-year-old tycoon to pay a fine of 26 billion won.
"With his influence, (the defendant committed crimes that) resulted in hindering the group's image and development as a whole. The court is imposing tough punishment against the defendant, considering the scale of the crime and the defandant's social status and social reponsibility," Judge Kim Young-gwan said in his ruling.
The court, however, did not immediately lock up Lee, the country's 10th-richest man, saying that he is not a flight risk.
The court also sentenced CJ Global Holdings vice president Shin Dong-ki to three years in prison with a five-year stay of execution for aiding Lee's crime.
Two other former or current executive members who colluded with Lee, surnamed Sung and Bae, were sentenced to three years in prison with a four-year stay of execution, and two years and six months in prison with a three-year stay of execution, respectively.
Following the verdict, Lee's lawyer told reporters that he would lodge an appeal with a higher court, as Lee's claim of innocence over slush fund management has not been acknowledged.
"It's too bad that the court didn't accept the chairman's claim of innocence, especially concerning the management of slush funds. It's been managed separately for business purposes only," a CJ spokesman told reporters after the ruling.
Prosecutors initially asked the court to sentence Lee to six years behind bars for violating the laws.
Lee is currently standing trial without detention after he requested the suspension of imprisonment citing his poor health. He underwent a kidney transplant surgery last August.
Lee was indicted last July on charges of embezzling some 165.7 billion won for slush funds and dodging 54.6 billion won in taxes.
Charges against Lee were brought to attention last year when prosecutors widened their probe into food and entertainment giant CJ Group, tracing offshore bank accounts and slush funds.
Investigators suspected that Lee, with the help of four executive members, set up paper companies in the British Virgin Islands to evade taxes and to operate overseas slush funds of about 260 billion won.
CJ Group, which covers sectors ranging from pharmaceuticals to entertainment, was part of Samsung Group until 1997. Lee Jay-hyun is also a nephew of Lee Kun-hee, the chairman of Samsung Electronics Co. and South Korea's richest man.
Currently, top executives of several other big corporates also face charges ranging from embezzlement to tax evasion, including SK Group's Chey Tae-won, telecom giant KT's former chairman Lee Seok-chae, Tong Yang Group's former chairman Hyun Jae-hyun and Hyosung Group chairman Cho Suk-rae.