Indicted in 2014, case concludes 12 years later

Sentenced to two years and six months in prison, suspended for four years

The Supreme Court in Seocho-gu, Seoul. (Yonhap)
The Supreme Court in Seocho-gu, Seoul. (Yonhap)

The Supreme Court on Thursday finalized a suspended prison sentence for Lee Sang-woon, vice chairman of Hyosung Group. He had been tried on charges of tax evasion and other corporate wrongdoing involving hundreds of billions of won. The court's final ruling came about 12 years after Lee was first indicted in 2014.

The Supreme Court's Second Division, headed by Justice Um Sang-pil, held a sentencing hearing for Lee's second appeal on tax charges under the Act on Aggravated Punishment of Specific Crimes. It upheld the lower court's ruling from the retrial it had ordered, sentencing him to two years and six months in prison, suspended for four years.

The bench said, "There was no error affecting the ruling — the lower court did not fail to conduct the deliberation necessary for its judgment, did not violate the rules of logic and experience in a way that exceeded the limits of free evaluation of evidence, and did not misunderstand the legal principles governing deductible expenses and bad debt determination criteria under the former Corporate Tax Act, or the applicable law."

According to the court, Lee was indicted in January 2014, along with the late Cho Seok-rae, honorary chairman of Hyosung Group. The charges included embezzling 69.8 billion won ($52.2 million) from Hyosung's overseas subsidiaries. He was also accused of causing 23.3 billion won in damage by illegally having Hyosung's Singapore unit forgive a loan owed by a Hong Kong-based paper company. He also faced charges of evading about 120 billion won in corporate taxes through 501 billion won worth of accounting fraud between 2003 and 2012. He was further accused of evading about 11 billion won in capital gains tax by trading hundreds of billions of won worth of shares under other people's names.

In January 2016, the district court sentenced Lee to two years and six months in prison, suspended for four years. The appellate court upheld the same sentence in September 2018. However, the Supreme Court overturned the ruling in December 2020.

The Supreme Court found that some of Lee's corporate tax evasion charges warranted acquittal, overturned the lower court's ruling and sent the case back to the appellate court. The top court held that tax evasion could not be established for the portion related to the 2008 fiscal year. Tax authorities had already canceled the corporate tax assessment for that year. However, it found that Lee could be held liable for illegal dividend payments, since dividends had been paid based on fraudulent financial statements despite the absence of distributable profit.

In December 2025, the appellate court, in the retrial ordered by the Supreme Court, again sentenced Lee to two years and six months in prison, suspended for four years. That bench found Lee not guilty of tax evasion for the 2008 fiscal year. However, it rejected Lee's claim of innocence over tax evasion for the 2007 fiscal year, and found him guilty of violating the Commercial Act over the illegal dividend payments.

The bench at the time said, "Although some findings of not guilty and guilty were added, most of the determinations made by the lower court were upheld as they were." It added, "Since the sentence of two years and six months already fell below the recommended minimum of two years and eight months, a lower sentence than the previous ruling cannot be imposed even after accounting for the partial acquittal." Cho, the former honorary chairman who was indicted together with Lee, died in March 2024 while the retrial was underway. As a result, the bench dismissed the indictment against Cho on the grounds that the defendant had died.


yg@heraldcorp.com