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Daewoo Founder Sentenced 10 Years in Prison
Kim Woo-choong, former chairman & founder of Daewoo Group

Seoul district court sentenced Kim Woo-choong, former chairman and founder of the ill-fated Daewoo Group of South Korea to a 10-year jail term for accounting fraud and embezzlement in its ruling on Kim's sentence on May 30, 2006.

The Court at the same time ordered the 69-year-old Kim to forfeit 21.4 trillion won with a fine of 10 million won.

Kim was not physically detained immeidately as he was permitted to stay out of the detention for medical treatment until July 28 under a court order issued earlier.

Kim's Daewoo Group, once the second-largest conglomerate in South Korea, collapsed in 1999 under debts of about $80 billion won in the wake of the 1997-98 Asian financial crisis.

The prosecution earlier asked for a 15-year prison sentence and a fine of about 23 trillion won ($24.6 billion) for Kim Woo-choong, founder of the now-defunct Daewoo Group, at the final court hearing Tuesday.

The 70-year-old Kim, indicted last year for accounting fraud and other financial irregularities in one of Korea's largest corruption scandals ever, is currently hospitalized at Yongdong Severance Hospital, southern Seoul, with heart problems.

Prosecutors from the Supreme Prosecutors' Office claim the former Daewoo head added strains to the nation's economy through ``the company's high-leveraged financial structure, unreasonable expansion and irresponsible management, which cost 30 trillion won in public funds.

The defendant has been denying some of the charges against him, but even such accusations have been confirmed to be true through other evidence we were able to gather,' the prosecutors said.

However, Kim's attorneys argue the former Daewoo head should not be held solely responsible for the company's failure, since it was also a product of the government's poor economic policies that brought upon the currency crisis in the late 1990s.

Last July prosecutors indicted the veteran businessman on charges of ordering Daewoo executives to inflate the group's assets by 41 trillion won between 1997 and 1998, and of illegally borrowing about 10 trillion won from local banks by manipulating accounting figures and forging letters of credit.

Kim is also accused of diverting 25 trillion won in slush funds overseas by manipulating import-export transaction records.

Once Korea's second-largest industrial group, Daewoo collapsed in July 1999 under the weight of $80-billion debts and was placed under a government-led restructuring program. After leaving Korea on a self-imposed exile in 1999, Kim returned to Seoul from Vietnam last June to face the criminal investigation against him.

More recently, there were widespread reports that Kim Woo-choong was about to make a comeback. Among the potential investors who were reported to have been helping Kim behind the scene are Kumho Asiana Group; Isu Group; Eugene Group; Daewoo Motor Sales Corp.'s engineering & construction division and Daeju Holdings.

Some industry sources said that Kim was preparing for a comeback by indirectly acquiring Daewoo Construction from creditors through his friendly powers.

Kumho Asiana and Isu are connected with Kim Woo-choong by marriage of sons and daughters.

Kim's second son, Sun-hyup, is married with Park Eun-hyung, Kumho's late chairman Park Jeong-koo's eldest daughter. The Daewoo founder is also the father-in-law of Isu Group chairman Kim Sang-beom.

Paek Ki-seung is a former managing director of the Eugene Group who works as personal spokesman of Kim Woo-choong. He also works as an advisor to the Eugene Group.

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