A lower court sentenced SK chairman Chey Tae-won to four years in prison on Thursday for embezzling corporate funds for stock investment.

The 53-year-old tycoon was put in prison immediately following the verdict by the Seoul Central District Court.

Separately, a Seoul higher court also gave a two-and-a-half-year prison term to Lee Kuk-chul, chairman of SLS Group, on the same day on several charges including bribing a former vice culture minister and other high-ranking government officials. Lee’s sentence was reduced to two and a half years, from three and a half years in the first trial, but the court sent him into custody right away.

The court found the SK chairman guilty of embezzling some 49.7 billion won ($44.5 million) from SK Telecom Co. and other SK Group affiliates and transferring it to an investment firm headed by a former SK executive to buy stock futures and options in 2008.

The executive named Kim Joon-hong delivered the money, on the request of Chey’s younger brother Jae-won, to a Korean investor operating a business overseas, the court said.

His brother Jae-won, vice chairman of SK Group, however, was acquitted of his charges, as the court found that testimonies against him had no credibility.

Chey was also indicted for creating a slush fund of some 13.9 billion won by requesting SK executives to return a part of their overestimated annual incentives. But the court cleared him of the charge.

“Chairman Chey Tae-won will be harshly criticized for committing crimes and seeking personal gain in exploiting affiliates of his own group,” judge Lee Won-bum said in his ruling. “(He has) broken the public’s trust in SK Group which has been taking a lead in social responsibility since 1970,” he said, adding that the chairman had shown no sign of repentance for his crimes.

The disgraced SK chief strongly rejected his charges, saying he hadn’t done anything wrong.

“But I didn’t do anything wrong. This is all I can say,” the chairman told the court before he was placed in custody.

SK Group will immediately appeal against the court’s decision, SK officials said in a statement released right after the ruling.

The head of the country’s third-largest conglomerate was put behind bars for the second time. He was imprisoned in 2003 on charges of accounting fraud totaling 1.5 trillion won before being released on appeal. He was granted a presidential pardon in 2008.

Earlier in the day, the upper court found Lee, chairman of SLS Group, guilty of providing former Vice Culture Minister Shin Jae-min with a corporate credit card, through which the official charged some 130 million won in exchange for business favors.

The court, however, acquitted him of falsifying his company’s financial status reports and receiving some $600 million additionally in refund guarantees from a state-run trade insurance firm. The court said in its ruling that the decision was made by the insurance firm itself.

The SLS Group head was at the center of political debate as he exposed claims of corruption among high-level government officials and lawmakers including President Lee Myung-bak’s brother, Lee Sang-deuk.

The court’s decision on the country’s two business leaders on Thursday came to the fore as political circles have been stepping up attacks on chaebol, or local family-owned conglomerates.

President-elect Park Geun-hye agreed to introduce stricter penalties with jail sentences for chaebol owners for embezzlement or malpractice. She reiterated that presidential pardons for business leaders would be limited as well.

Feeling the pressure, Chey stepped down from the top post of SK Group in December last year. He remains a “strategic” shareholder and holds the chief executive position at SK Holdings, SK Innovation and SK Hynix, the group said.

The Federation of the Korean Industries expressed regret over the court’s ruling, saying that it would create anti-business sentiment.

By Cho Chung-un (christory@heraldcorp.com)