Founder of Korea’s Eastar Jet jailed for six years
Eastar Jet (ESR, Seoul Gimpo) founder and politician Lee Sang-jik was sentenced to six years in prison on January 12 having been found guilty of embezzlement of company funds and breach of trust, Yonhap News Agency reported.
Jeonju District Court in western South Korea, 200 kilometres south of Seoul, handed down the sentence to Lee after convicting him on a number of charges, embezzlement being the most serious, and ordered his immediate detention. He had been arrested on these charges in April but was released on bail in October.
Lee was imprisoned for causing KRW43.9 billion won (USD37 million) in losses to the airline by underselling company shares to a subsidiary owned by his children in 2015.
Separate charges accused him of embezzling KRW5.36 billion (USD4.5 million) from the airline and its affiliates as well as being responsible for damages amounting to around KRW5.6 billion (USD4.7 million) at Eastar-related companies by arbitrarily raising or downgrading the value of bonds held by them, or by paying off their debts earlier than scheduled between 2016 and 2018.
In an earlier court hearing in November, prosecutors had recommended a ten-year jail term and a KRW55.4 billion (USD46.7 million) fine.
Lee had been an independent politician after leaving the ruling Democratic Party in September 2020 as controversy grew over unpaid wages and mass layoffs at Eastar Jet and corruption allegations surrounding his family.
It had been feared that prosecutors’ investigations, including a parallel probe into possible cash flows from the airline to a planned-but-never-launched subsidiary Thai Eastar Jet (ESS, Bangkok Suvarnabhumi), could disrupt Eastar Jet’s restructuring process and planned relaunch. However, following its sale to property developer Sungjeong in November, this appears to be pressing ahead with Eastar Jet recently paying off KRW68.3 billion (USD57.5 million) worth of unpaid wages and claims to other companies.
The Korean-language news site Economic Review reported on January 12 that Eastar Jet plans to secure a fleet of ten aircraft by the end of 2022 with a view to resuming domestic flights while monitoring whether international routes can be revitalised, in particular to China such as Seoul Incheon-Shanghai Pudong and Jeju-Shanghai. It has applied for renewal of its Air Operator’s Certificate (AOC) from the Ministry of Land, Infrastructure, and Transport.