South Korea’s Supreme court on Thursday ordered a lower court to reconsider its ruling that convicted Lee Jay-hyun, the chairman of food and media giant CJ Group, of corporate crimes.

The owner of Korea’s 7th-biggest conglomerate was sentenced to three years in jail and fined 25.2 billion won ($21 million) by the lower court in September 2014 for embezzlement, breach of conduct and tax evasion in a slush fund case.
 

The 55-year-old tycoon was indicted in July 2013 after allegedly orchestrating the creation of offshore slush funds and tax evasion, totaling 160 billion won.

While upholding the lower court’s verdict on the embezzlement and tax evasion charges, the Supreme Court differed on his breach of duty charges.

The highest court sent the case back to the lower court, taking issue with the amount of the money Lee misappropriated and the ordinance applied to his crime – the Act on the Aggravated Punishment of Specific Economic Crimes.

The prosecution charged him in accordance with the aggravated punishment law, accusing Lee of having forced CJ Group’s Japanese branch to give a joint guarantee in a dubious real estate deal with a property manager, Pan Japan, in 2007.

Lee was suspected of having purchased property in Tokyo, Japan, under a false name using secret overseas funds funneled through Pan Japan, causing more than 30 billion won in financial losses to the company.

But the court said that his crime should be subjected to the Criminal Act, rather than the aggravated punishment law on economic crimes, as the exact profits from the shady real estate deal cannot be calculated.

When the Criminal Act applies to his crime, Lee could face a sentence of up to five years and a fine of up to 15 million won. But the aggravated punishment law could hand him down a life imprisonment or jail term of more than five years.

As the court accepted Lee’s request to suspend the imprisonment for hospital treatment, he will stand trial without physical detention.

Lee underwent a kidney transplant last July, but allegedly suffered from multiple side effects. He is currently staying at the Seoul National University Hospital.

Following the ruling, CJ Group expressed relief, saying that it hopes to see the prison sentence for Lee reduced or suspended in the upcoming retrial.

“Given Lee’s frail health, we are relieved that the chairman secured a chance to lower his prison term,” a spokesperson for CJ said. “We expect the lower court to make a verdict in line with the highest court’s intention.”

Lee, a nephew of Samsung Group chairman Lee Kun-hee, took the helm of Cheiljedang, the precursor to CJ Group, in 2002.

By Ock Hyun-ju (laeticia.ock@heraldcorp.com)