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Last Updated: Friday, 13 June, 2003, 06:54 GMT 07:54 UK
SK Corp chairman imprisoned
SK chairman Chey Tae-won is handcuffed as he enters the Seoul court
SK's chairman was the eldest son of the founding family

The chairman of SK Corp, South Korea's biggest oil refiner, has been sentenced to three years in prison following revelations of the group's massive accounting fraud.

Chey Tae-won was jailed for his part in the $1.2bn (720m) accounting fraud rocking the SK Group conglomerate, of which SK Corp is a key trading unit.

SK Group chairman Son Kil-Seung was also found guilty of accounting fraud and given a three-year suspended sentence while eight other executives were given suspended sentences.

The accounting scandal at SK Group's trading arm SK Global, has left the group on the brink of bankruptcy.

It was discovered in March that earnings for 2001 had been inflated by $1.2bn to hide losses.

Chaebol crackdown

Chey Tae-Won is the eldest son of the group's founding family and controls the conglomerate and its 58 subsidiaries, including the country's leading mobile phone group SK Telecom.

He is also the son-in-law of the former South Korean president, Roh Tae-Woo.

SK Group said it was shocked by his jail sentence and considering an appeal.

The severe sentence comes as President Roh Moo-hyun stamps down on corruption in the leading conglomerates, known locally as "chaebol".

These groups came to symbolise South Korea's rapid rise from poverty to a global industrial giant.

But they have since become part of the country's financial crisis through their huge debt mountains.

Bailout attempt

The crack-down coincides with similar attempts by US regulators to stamp out corruption in the wake of scandals such as Enron and Tyco International.

A number of top executives from South Korean businesses, including the Daewoo car group and Hanbo Steel, have already been jailed for corruption.

SK Corp meanwhile is trying to extricate itself from the scandal using a bailout package worth more than $700m.

Foreign investors in SK Corp are opposed to the idea but it is now unclear whether the key board meeting will go ahead following the sentencing of the group's chairman.

Creditors' lifeline for SK Global
10 Jun 03  |  Business
S Korea to probe chaebols
03 Jun 03  |  Business
SK holds out bailout hope
29 May 03  |  Business
Trade suspended in Korean giant
31 Mar 03  |  Business

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