South Korea’s top court on Thursday upheld a lower court’s ruling to sentence the chief of SK Group, the country’s third-largest family conglomerate, to four years in jail for embezzling company assets.

SK Group chairman Chey Tae-won was convicted of misappropriating nearly 46.5 billion won ($43.6 million) from two of the SK Group affiliates ― SK Telecom Co. and SK C&C Co. ― to make personal investments in stock futures and options in 2008.

The Supreme Court also handed down a three-and-a-half-year prison term to Chey Jae-won, the chairman’s younger brother and SK Group vice chairman, for collusion.

“We acknowledge the guilty verdict in a lower court that chairman Chey Tae-won and vice chairman Chey Jae-won conspired to commit the crime,” the court said in its ruling.

SK Group expressed frustration over the court’s decision on Thursday, saying that the ruling would adversely impact the operations of the family-owned conglomerate.

“We respect the court’s ruling but it is very regretful that our appeal was not considered,” Yang Sung-wook, the group’s public relations official, told The Korea Herald.

“The group will be greatly hit by the absence of direct management,” Yang said. “SK Group’s core businesses are centered around overseas projects such as resource development and they need high-ranking officials to build relationships with overseas partners and run long-term global business projects,” he added.

Civic groups, however, held a different view on the high-profile legal case involving a powerful Korean chaebol with an interlocking governance structure.

“The court’s decision is meaningful in that it dispelled worries that the government’s promised economic democratization is stepping backwards,” said Lee Ki-ung, economic policy team manager at the Citizens’ Coalition for Economic Justice.

Thursday’s verdict came as a surprise for those who had expected that the court would give light sentences to the two brothers, as many Korean judges have handed down soft punishments to the top executives of chaebol groups, often citing their contribution to the country’s economic development.

SK Group had previously expressed high hopes, particularly after Hanwha chairman Kim Seung-youn and LIG Group chairman Koo Cha-won received suspended sentences this month.

Chairman Chey and his brother were indicted in 2012 for misappropriating hundreds of millions of won from SK companies.

The chairman, the eldest son of the group founder Chey John-hyun, was taken into custody in January last year after a Seoul district court sentenced him to four years in prison. An appeals court upheld the ruling in September last year.

The vice chairman received a not-guilty verdict from a Seoul court but was detained after an appeals court sentenced him to three years and six months behind bars.

The two brothers claimed that SK Shipping’s adviser Kim Won-hong was pulling the strings behind the scene. But judges rejected their demand for additional hearings with Kim in attendance.

The Supreme Court verdict ― a major setback for SK Group ― is likely to put more attention on a slew of conglomerate chiefs who are on trial for suspected crimes ranging from tax evasion to stock manipulation.

CJ Group chairman Lee Jay-hyun received a four-year prison term in a Seoul court on Feb. 14 for misappropriating about 166 billion won and trying to evade taxes. Lee’s lawyer said he would appeal with a higher court.

Hyosung Group chairman Cho Suck-rai, meanwhile, was indicted last month for breach of duty, tax evasion and embezzlement. He was additionally charged of violating commercial law and a law on capital market and financial investment. Cho will attend his second hearing on March 17.

The chairman of financially troubled Tong Yang, Hyun Jae-hyun, was also indicted last month for illegally issuing and selling financial products and inflicting losses on about 40,000 individual investors. He denied all allegations made by the prosecution.

By Suk Gee-hyun (monicasuk@heraldcorp.com)