5-yr jail term upheld for ex-head of scandal-ridden SillaJen over breach of trust

National 15:12 February 25, 2022

SEOUL, Feb. 25 (Yonhap) -- An appellate court on Friday upheld a five-year prison sentence for a former head of the scandal-ridden biotech company SillaJen charged with breach of trust.

The Seoul High Court, however, sharply reduced the amount of fine that former SillaJen chief Moon Eun-Sang was sentenced to by a lower court in August last year to 1 billion won (US$832,154) from 35 billion won.

Moon was accused of taking illegal profits through an intricate financing scheme involving the company.

He allegedly borrowed 35 billion won from a local financial investment firm via a shell company to buy SillaJen's warrant-linked bonds. The money thus won by SillaJen was loaned back to the shell company.

The lower court recognized all 35 billion won as corporate loss Moon inflicted on SillaJen, but the appellate court reduced the size to 1.05 billion won.

"Private profit-taking by corporate executives using insider information could deal a blow to public trust on the capital market, as well as to the national economy, making it necessary to punish (Moon) with a strict penalty," a judge said during the ruling.

The state bourse operator is expected to review whether to delist SillaJen from the KOSDAQ market following a six-month grace period given to the firm earlier this month to improve its business practices.

Trading of Sillajen stocks has been suspended since May 2020 after Moon and other former and current company officials were accused of embezzlement and dereliction of duty.

After its market debut on Dec. 6, 2016, shares of Sillajen rallied to over 150,000 won in late 2017 before plunging to the 12,000 won level ahead of the trading ban, lower than its IPO price of 15,000 won.