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District court chief steps down amid ‘emperor’s labor’ controversy

A South Korean judge offered to resign on Saturday after his 2010 ruling on a former tycoon touched off a firestorm of public criticism.

The judge set the convicted businessman’s daily pay of prison labor at at 500 million won ($467,726), a record sum that outraged the public and triggered a slew of developments including the authority’s review of the current prison labor system for a drastic overhaul.

Chang Byong-woo, chief of the Gwangju District Court, sent a letter of resignation to the press at 1 p.m. Saturday, apologizing for his ruling that allowed former Daeju Group chairman Huh Jae-ho to repay his 25.4 billion fine with 50 days of prison labor.

The announcement of his resignation came a day after local media reported a dubious apartment trade between Chang and a Daeju affiliate, only to raise the ongoing suspicion towards the two’s allegedly illegal ties.

“I feel responsible as a chief of a district court over recent reports on my case. I apologize to the public, and I’m offering to resign,” Chang said in his statement.

According to local broadcaster TV Chosun, Chang purchased an apartment in Gwangju built by Huh’s construction firm, Daeju Construction, in 2005.

Five months after moving to the new apartment in 2007, Chang sold his old apartment to HH Development, a unit of the now-defunct Daeju Group.

Real estate agents say the purchase was highly unusual for HH Development, which mainly handles leasing commercial buildings.

“The apartment in question was legally purchased,” Chang explained. “I regret that reports have been made without my confirmation, but I apologize for causing the scandal due to my carelessness.”

Reports suggest that state administrators and business circles had also played a role in attempting to soften the punishment for the former chairman during the prosecutors’ investigation in 2007.

During the probe, former Gwangju Mayor Park Gwang-tae and South Jeolla Province Governor Park Joon-young held a press conference, urging the prosecution to question Huh without taking him into custody. They claimed that his arrest would have a negative impact on the regional economy.

Established in 1981, Daeju Group was once a thriving conglomerate that owned 30 affiliates and about 1,500 partner firms, but the group’s golden age did not last long.

In 2007, the former chairman was indicted on charges of dodging about 50.8 billion won in taxes and misappropriating 10 billion won of corporate money. Three years later, Daeju Group went bankrupt and was liquidated due to massive sales loss in its construction subsidiary.

In January 2010, the Gwangju District Court sentenced the disgraced chairman to 30 months in jail with a four-year stay of execution. In 2011, the top court upheld the court’s ruling.

The bone of contention is the fine and unfair privilege given to Huh.

While the appellate court halved his fine from 50.8 billion won to 25.4 billion won, it gave the former tycoon an option to work off his fine with 50 days of labor in prison. That puts the daily value of Huh’s labor at 500 million, about 10,000 times higher than the usual pay given to other convicts, for doing manual jobs like folding paper bags or making tofu.

Local media called the scandal “emperor’s labor,” referring to the highest valuation of prison work in history.

In response to mounting criticism, the Supreme Prosecutors’ Office on Wednesday lifted Huh’s penalty and pledged to levy the remaining 22.4 billion won fine, excluding six days of his short prison labor.

On Friday, the top court decided to revise the current labor prison guidelines for setting appropriate labor pay and imprisonment period, to avoid convicts from taking advantage of legal loopholes and dodging fines.

The new guidelines will dictate that prisoners slapped with fines of 100-500 million won would be required to serve in working prison facilities for at least 300 days. While those fined between 500 million won and 5 billion won would have to stay a minimum of 500 days and prisoners with a fine of 5-10 billion won are to serve at least 700 days in jail. Convicts fined more than 10 billion won are subjected to work at least 900 days in the facilities.

Tax authorities launched a probe to track down the hidden assets of Huh. Most of his assets are believed to be in Korea and New Zealand, where he lived affluently to avoid paying fines after the court’s sentence.

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