Chey Tae-won, chairman of SK Telecom parent SK Group, has lost an appeal against a guilty verdict and prison sentence imposed during an embezzlement trial.
A South Korean appeals court also overturned an acquittal of vice chairman Chey Jae-woo and sentenced him to a three-and a half-year prison term, Business Koreareported. Chey Jae-woo is Chey Tae-won's brother.
The appeals judge found the brothers guilty of embezzling funds from SK Group affiliates to make personal investments.
The vice chairman's aquittal was overturned because the court did not consider his reversed testimony to be credible. He had confessed to collusion in the first trial, but insisted in the appeals court that this had been a false confession.
Chey Tae-won was jailed in February after a lower court found him guilty of embezzling nearly 50 billion won ($46.3 million) of affiliates' funds.
The final verdict in the case will be decided by the nation's Supreme Court.
In a research note, credit ratings agency Moody's said the verdict will have no immediate impact on its ratings for SK Group companies including SK Telecom.
“This development is damaging for SK Group's reputation and reveals that corporate governance issues persists,” Moody's VP and senior analyst Mic Kang said.
“But the related concerns are mitigated by the fact that the group has professional management teams, which remain in place, and which have track records of maintaining solid or improved financial profiles for all of the five Moody's-rated SK companies.”