Seoul court sentenced LIG Group Chairman Koo to three years in jail for fraudulently issuing $200 million commercial papers under the name of the group’s construction arm, despite knowing that the builder was on the verge of falling undder

2013-09-15 16:52

Penalizing tycoons

A Seoul court has meted out severe prison sentences to the chairman of a conglomerate and his son in what appears to be the court’s strengthening of its sentencing guidelines for serious economic crimes. This must be a positive development, given that the court often faced harsh criticism for handing out light sentences to chaebol tycoons, not commensurate with the severity of their crimes, under the deep-seated practice of ”one law for the rich and another for the poor.’’ Such practices of light sentences have been cited as one of the reasons behind incessant economic crimes.On Friday, the Seoul Central District Court sentenced LIG Group Chairman Koo Cha-won, 78, to three years in jail. He was charged with fraudulently issuing commercial papers worth more than 200 billion won under the name of the group’s construction arm, despite knowing that the builder was on the verge of falling under court receivership.
The illicit issuance of the short-term debt inflicted huge losses to 800 innocent investors. Koo, who had been standing trial but not in detention due to his advanced age and poor health ― he underwent liver cancer surgery in 2010, was taken into custody immediately after the verdict was announced. Koo Bon-sang, his eldest son and vice chairman of LIG Nex1, a defense systems manufacturer, was given eight years in prison on the same charge.
The court said that Chairman Koo and his eldest son had committed “a serious corporate crime that could have caused mass chaos in the free market economy.” The court was right in handing out severe sentences on the two and other LIG executives, considering their negligence in enhancing transparent corporate management. This is all the more so, given that they frequently reversed testimonies, deleted related data and fabricated financial statements in the course of the probe and the trial.
While it is necessary to create a milieu in which entrepreneurs are respected in our society to rejuvenate the sagging economy and create jobs, illegal acts committed by some large companies incite anti-business sentiments and threaten the very foundation of our free market economy. This, in turn, will result in even conscientious entrepreneurs being criticized all together.
The time has been long overdue for misbehaving industrialists to forgo the privilege of avoiding punishment merely for being thought to have contributed to economic development. Rigorous penalties will have to await those who break the law without fail.
Entrepreneurs, for their part, ought to commit themselves to law-abiding and transparent corporate management.

About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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