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Chung Mong-koo ordered to pay Hyundai Motor $73 mln for unfair practice

All Headlines 12:04 February 25, 2011

By Kim Eun-jung

SEOUL, Feb. 25 (Yonhap) -- A Seoul court on Friday ordered Hyundai Motor Chairman Chung Mong-koo to pay 82.6 billion won (US$73.1 million) in compensation to his own company for inflicting damage on the top South Korean automaker by unfairly supporting Hyundai affiliates.

A group of 14 minority shareholders and the NGO Solidarity for Economic Reform had filed a suit against Chung and Kim Dong-jin, vice chairman of Hyundai Mobis, an auto parts manufacturing affiliate, claiming the top executives should cough up 1.9 trillion won for losses and fines imposed on the leading automaker due to unfair practices in regard to the affiliate operation.

The watchdog Fair Trade Commission in 2008 slapped Hyundai Motor with a 50.7 billion won fine for exclusively placing orders with Hyundai's affiliates - Hyundai Mobis, Kia Motors and Hyundai Glovis -- and allowing its chairman Chung and his son to unfairly take sizable shares of Hyundai Glovis, a logistics affiliate company.

Hyundai Motor in 2001 established Hyundai Glovis to task the company with logistics operations, with the 73-year-old tycoon and his only son, Chung Eui-sun, financing 40 percent and 60 percent, respectively, for the affiliate.

In a ruling, the Seoul Central District Court acknowledged that the elder Chung and Kim violated their obligations to fulfill their duty as top executives, limiting the vice president's joint responsibility at 10 percent of total reparations, or 8 billion won.

The court, however, did not order the Chung family to return their Hyundai Glovis shares and profits to Hyundai Motor, dismissing plaintiffs' claims that the chairman deprived the automaker of the opportunity to create profits with the shares.

The two Hyundai executives were fined 70 billion won in February last year after having been found guilty of inflicting damage on the automaker through its risky share sales of its affiliates -- Hyundai Airspace and Aircraft Co. and Hyundai Hysco in 2001.

ejkim@yna.co.kr
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