JEONJU, South Korea– The founder of South Korean budget carrier Eastar Jet Co. was sentenced to six years in prison on Wednesday for embezzlement of company funds and breach of trust.
A district court in Jeonju, 240 kilometers south of Seoul, handed down the sentence to Eastar founder and independent lawmaker Lee Sang-jik after convicting him on several charges, including embezzling about 7 billion won (US$5.9 million) from Eastar and its affiliates.
The Jeonju District Court also ordered Lee’s immediate detention.
Lee will lose his National Assembly seat if his sentence is finalized.
Lee was indicted for causing about 43.9 billion won (US$38.8 million) in losses to the airline by underselling company shares to a subsidiary owned by his children in 2015.
He was also charged with embezzling about 5.36 billion won from Eastar and its affiliates. In addition, Lee was accused of causing a loss of about 5.6 billion won to Eastar affiliates by arbitrarily raising or downgrading the value of bonds held by them, or paying off their long-term debts earlier than scheduled from 2016 to 2018.
The prosecution calculated the amount of embezzlement and breach of trust to be 55.5 billion won, but the court set the amount at about 7 billion won.
“Lee effectively controlled and privatized Eastar Jet and its affiliates,” the court said, finding him guilty of underselling company shares for the benefit of his children and making early payment of bonds for personal interests.
“As a result of the defendant’s crimes, a huge loss of 7 billion won was caused to Eastar and affiliates, and the damage was not properly recovered. Nevertheless, he has not repented and instead shifted responsibility to his subordinates and even destroyed accounting data or submitted false data to cover up his crimes,” it said.
The court also sentenced the head of Eastar Jet’s finance team, Lee’s nephew, to 3 1/2 years in prison and former Eastar Jet CEO Choi Jong-gu to an imprisonment of two years, suspended for three years, on charges of collusion.
In the previous court hearing last November, prosecutors demanded a 10-year prison term and a forfeiture of 55.4 billion won for Lee.
Lee defected from the ruling Democratic Party in September 2020 amid controversy over unpaid wages, mass layoffs and corruption allegations surrounding his family. Lee was arrested in April last year but released on bail in October.
In a separate case, Lee was given a suspended sentence of 16 months in prison by the same court in June last year for violating election laws by offering alcoholic beverages and books to electorates ahead of the 2020 parliamentary elections.
Eastar Jet used to operate 23 chartered planes to serve 37 short-haul international routes before the COVID-19 pandemic hit the airline industry in early 2020.
It applied for court receivership in January last year, and local property developer Sung Jung Co. acquired an entire stake in Eastar in November following the debt-laden carrier’s overall stock cancellation.
Source: Yonhap News Agency