Prosecutors demanded a six-year prison term against Hyundai Motor Co chairman Chung Mong-koo for embezzlement and other charges yesterday, adding to the woes of the largest South Korean automaker.
Chung, 68, had been on trial since June on charges of illegally raising a slush fund from affiliates from which authorities say he spent 69.3 billion won (US$74 million) for private and other purposes, including payments to lobbyists for government favors.
He has also been charged with inflicting financial damage on affiliates through questionable deals and arrangements that allegedly protected or boosted the financial interests of him and his son, Eui-sun, who heads Kia Motors Corp, the country's second-largest carmaker.
The younger Chung doesn't face trial.
"It's unavoidable to seriously punish the defendants ... because the crimes in this case are grave," lead prosecutor Lee Dong-ryol said at the trial, which also included other company officials.
Chung Mong-koo apologized and pledged to make Hyundai the world's No. 5 automaker if given the chance. Hyundai and affiliate Kia Motors combined are the sixth-biggest auto manufacturer.
"I'm sorry for causing trouble over this case," he told the court.
Chung's defense lawyers called for leniency and asked for a suspended sentence in light of their client's health and the effects his conviction would have on Hyundai and the entire country's economy.
Hyundai and Kia account for more than 70 percent of South Korea's automobile exports. Cars account for about 10 percent of South Korea's total exports.
It was unclear how the judges at Seoul Central District Court would rule. But South Korean courts have often come under public criticism for being too lenient on business tycoons after they sentenced high-profile chief executives to suspended jail terms in similar corruption cases.
The verdict and sentencing was scheduled for Feb. 5.
Chung has been out on bail since late June after two months of detention following his April arrest.
The trial has cast a cloud over the company, which is also suffering from a row with its militant labor union that intensified this week with new strikes.
Unionized workers laid down tools for a total of eight hours at three factories on Monday in a dispute with management over the size of a bonus payment. Though workers were not scheduled to strike yesterday, they have scheduled a longer walkout for today.
Yesterday, Hyundai Motor president Youn Yeo-chul was meeting with the head of a labor union to discuss how to end the partial walkout, the company said.
Labor troubles have been a near-constant headache for Hyundai. Through last year, Hyundai's union had gone on strike every year but one since it was established in 1987.
Public sentiment has turned against the union, with local media accusing union workers of selfishness at a time when their company is struggling with the strengthening Korean currency that hurts exporters.
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