Hur Young-in, chairman of South Korean bakery conglomerate SPC Group, was cleared of charges related to gift tax evasion of potentially 7.4 billion won ($5.57 million) through undervalued share transactions at an appeals court on Friday.
Earlier this year, Hur was accused of selling shares of Mildawon, the group-owned grain company, at below-market prices in December 2012 to avoid paying gift taxes. The shares were sold at 255 won each, significantly lower than their 2011 appraised value of 1,180 won and their 2008 purchase price of 3,038 won. The shares were transferred from SPC affiliates Shany and Paris Croissant to another affiliate, Samlip.
Prosecutors argued that the transaction was intended to evade an annual gift tax of 800 million won from being imposed on the chairman's family if the shares were not sold, allowing Hur to save 7.4 billion won over the past 10 years.
Hur was acquitted in the first trial, citing insufficient evidence to prove that the share pricing constituted a breach of duty or embezzlement. Prosecutors had appealed the decision.
However, the appeals court also dismissed the prosecution's case, reportedly stating, “Considering various factors, it’s difficult to conclude that the method used to evaluate the value of the Mildawon shares was illegal.”
SPC Group expressed relief at the ruling, saying, “We’re grateful that the misunderstandings regarding the facts have been cleared up, and it confirms that the Mildawon transaction was a measure aimed at improving the company’s governance structure to benefit the company as a whole.”
flylikekite@heraldcorp.com
