November 24, 2024

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SPC Group Chairman Hur Young-in (SPC Group)

An appeals court on Friday cleared Hur Young-in, founder and chair of South Korean bakery giant SPC Group, of tax evasion charges, bringing an end to the year-long legal dispute.

The Seoul High Court upheld a lower court ruling that found the SPC chief not guilty of breach of trust.

Hur faced allegations of instructing group affiliates Paris Croissant and Shany to sell stocks of Mildawon, another SPC company producing flour, to SPC Samlip at lower prices in December 2012 that, according to prosecutors, intended to avoid Hur having to pay higher taxes.

At the time, the shares were sold at 255 won ($0.19) per apiece, significantly lower than their 2011 appraised value of 1,180 won and their 2008 purchase price of 3,038 won.

Prosecutors argued that the transaction had allowed SPC’s founder to save up to 7.4 billion won in gift tax over the past 10 years. But SPC refuted the claims, saying that Mildawon’s share price was decided based on the company’s net profits over the previous three years – a common method to calculate the value of unlisted stocks.

In February this year, Hur was acquitted in the first trial, citing insufficient evidence, but prosecutors appealed the decision.

On Friday, the appeals court again dismissed the prosecution's claims, 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.”

By Hwang Joo-young (flylikekite@heraldcorp.com)