SEOUL, South Korea (AP) -- Hyundai Motor Co. Chairman Chung Mong-koo's wait is almost over.
Chung, arrested and briefly jailed last year, is set to receive the verdict in his corruption trial Monday, and analysts say the fortunes of the world's sixth-largest automaker could be affected by the outcome.
Prosecutors indicted Chung in May, accusing him of illegally raising a slush fund of 103.4 billion won ($110 million; euro85 million) via affiliates which authorities say was used to pay lobbyists and for other purposes.
Chung, whose trial began in June, has also been charged with inflicting financial damage on affiliates.
Prosecutors have been taking a hard line against corruption in South Korea. Last month, they sought a six-year jail term for Chung, calling his alleged crimes "grave."
Chung's attorneys argued before the three judge panel that he should receive a suspended sentence -- meaning no prison time -- citing health problems and the potential impact on South Korea's economy if he were to again be sidelined from management.
Chung was absent for more than two months after being jailed following his April arrest and entering a hospital for a health exam. He was granted bail in June and returned to work in July.
Key decisions about overseas plant construction involving both Hyundai Motor and its affiliate Kia Motors Corp. were delayed while he was away. Labor problems involving Hyundai's strike-prone labor union were also left to fester.
Many analysts have said that Chung will probably avoid a prison term given his central role in running arguably one of the country's two most important corporations, the other being Samsung Electronics Co.
"Especially now, it's a very important time for Hyundai," Yun Tae-sik, an auto analyst at NH Investment & Securities, said Friday, citing Hyundai's constant labor troubles, sluggish sales and pricing competition from Japanese automakers.
"The Japanese makers are able to sell cars for a better value than Hyundai" in the key U.S. market, Yun said, as they benefit from weakness in the Japanese yen versus the U.S. dollar. The South Korean won rose about 9 percent against the greenback last year.
Hyundai cited the South Korean currency as a key reason -- along with its worst year of production losses from strikes -- behind a 35 percent drop in 2006 net profit.
Chung's prolonged incarceration could "have a grave impact on the industry as well as the national economy (so a) suspended sentence is likely," said Yong Dae-in, an analyst at Goodmorning Shinhan Securities.
Hyundai and Kia account for more than 70 percent of South Korea's automobile exports. Autos make up about 10 percent of total exports in South Korea, the world's 10th-largest economy.
South Korea has a history of leniency toward corporate titans.
In a recent case, the Seoul District Court -- the same one deciding Chung's case -- ordered a three-year suspended jail term and a fine for Park Yong-sung, former chairman of the Doosan Group, for embezzling from the conglomerate.
The sentence was suspended for five years -- meaning Park will not be jailed if he stays out of trouble for that long.
Chung himself has made a bid for leniency, apologizing in court for "causing trouble over this case" and pledging to make Hyundai the world's No. 5 automaker if given the chance.
As of the end of 2005, Hyundai together with its affiliate Kia formed the world's No. 6 automaker in both production and sales, according to Automotive News, a publication that tracks the global vehicle industry.
"If he actually does have to go to jail it will cause some problems for Hyundai," said Yun. "Last year when he was in jail it all came to a stop."
Whatever the outcome, Chung's case has highlighted the issue of how South Korean companies are managed.
Source: CNN.com
Chung, arrested and briefly jailed last year, is set to receive the verdict in his corruption trial Monday, and analysts say the fortunes of the world's sixth-largest automaker could be affected by the outcome.
Prosecutors indicted Chung in May, accusing him of illegally raising a slush fund of 103.4 billion won ($110 million; euro85 million) via affiliates which authorities say was used to pay lobbyists and for other purposes.
Chung, whose trial began in June, has also been charged with inflicting financial damage on affiliates.
Prosecutors have been taking a hard line against corruption in South Korea. Last month, they sought a six-year jail term for Chung, calling his alleged crimes "grave."
Chung's attorneys argued before the three judge panel that he should receive a suspended sentence -- meaning no prison time -- citing health problems and the potential impact on South Korea's economy if he were to again be sidelined from management.
Chung was absent for more than two months after being jailed following his April arrest and entering a hospital for a health exam. He was granted bail in June and returned to work in July.
Key decisions about overseas plant construction involving both Hyundai Motor and its affiliate Kia Motors Corp. were delayed while he was away. Labor problems involving Hyundai's strike-prone labor union were also left to fester.
Many analysts have said that Chung will probably avoid a prison term given his central role in running arguably one of the country's two most important corporations, the other being Samsung Electronics Co.
"Especially now, it's a very important time for Hyundai," Yun Tae-sik, an auto analyst at NH Investment & Securities, said Friday, citing Hyundai's constant labor troubles, sluggish sales and pricing competition from Japanese automakers.
"The Japanese makers are able to sell cars for a better value than Hyundai" in the key U.S. market, Yun said, as they benefit from weakness in the Japanese yen versus the U.S. dollar. The South Korean won rose about 9 percent against the greenback last year.
Hyundai cited the South Korean currency as a key reason -- along with its worst year of production losses from strikes -- behind a 35 percent drop in 2006 net profit.
Chung's prolonged incarceration could "have a grave impact on the industry as well as the national economy (so a) suspended sentence is likely," said Yong Dae-in, an analyst at Goodmorning Shinhan Securities.
Hyundai and Kia account for more than 70 percent of South Korea's automobile exports. Autos make up about 10 percent of total exports in South Korea, the world's 10th-largest economy.
South Korea has a history of leniency toward corporate titans.
In a recent case, the Seoul District Court -- the same one deciding Chung's case -- ordered a three-year suspended jail term and a fine for Park Yong-sung, former chairman of the Doosan Group, for embezzling from the conglomerate.
The sentence was suspended for five years -- meaning Park will not be jailed if he stays out of trouble for that long.
Chung himself has made a bid for leniency, apologizing in court for "causing trouble over this case" and pledging to make Hyundai the world's No. 5 automaker if given the chance.
As of the end of 2005, Hyundai together with its affiliate Kia formed the world's No. 6 automaker in both production and sales, according to Automotive News, a publication that tracks the global vehicle industry.
"If he actually does have to go to jail it will cause some problems for Hyundai," said Yun. "Last year when he was in jail it all came to a stop."
Whatever the outcome, Chung's case has highlighted the issue of how South Korean companies are managed.
Source: CNN.com
