South Korea court cuts sentence for Daewoo founder

SEOUL, Nov 3 (Reuters) The man who founded the giant Daewoo Group and was at the centre of one of the biggest corporate bankruptcies in history has had his jail sentence cut by a South Korean court.

Kim Woo-choong, 69, who turned Daewoo into what once was the country's second largest conglomerate, was convicted earlier this year and sentenced to 10 years in jail for embezzlement and covering up billions of dollars in debt.

But an appeals court today cut his sentence to 8-{ years, saying the decision was partly based on the contribution Kim had made to building South Korea's economy.

''Despite being a criminal, the defendant is remembered among the Korean public as an entrepreneur who raised the status of the country,'' Suk Ho-chul, head of the three-judge appeals court panel, said.

A frail Kim, who entered court in a wheelchair and has been in hospital in the past year with heart trouble, looked down at the floor as the judge read the decision. He said nothing in court and returned to his jail cell after he was denied bail.

The appeals court also cut the amount of money Kim must forfeit from 20 trillion won (21.32 billion dollars) to about 18 trillion won, but the figures are somewhat symbolic because it is unlikely Kim has nearly that much in assets, legal sources said.

Kim's lawyers did not say whether they would further appeal to the Supreme Court. At his first trial, they said many people were to blame for Daewoo's collapse.

Daewoo started when Kim, then a fabric salesman, invested about 5,000 dollars in a textiles company in 1967.

He used his enormous energy, business acumen and close ties to South Korea's leaders to build that into a conglomerate that at its peak employed 320,000 people in 110 countries.

Once admired as a hero, Kim fled South Korea in 1999 when Daewoo collapsed with more than 70 billion dollars in debt.

Kim, saying he wanted to make peace with his past, returned in 2005 on a flight from Vietnam and was arrested upon his arrival.

Prosecutors charged him with illegally procuring loans of about 10 trillion won (10.66 billion dollars), taking about 20 billion dollars in Daewoo funds through overseas accounts and helping doctor Daewoo's books to falsify assets of about 41 trillion won.

Firms such as Daewoo were instrumental in rebuilding the economy in the years after the 1950-53 Korean War, but shady business practices and unrestrained borrowing were later partly blamed for leading to the financial crisis of the late 1990s.

In 1999, the South Korean government took control of Daewoo's debts, leaving taxpayers holding the bag for billions of dollars.

Then a multinational giant in civil engineering, automobiles and shipbuilding, Daewoo splintered into a clutch of businesses.

Several leading executives at other family-owned South Korean conglomerates, known here as chaebol, have been the subject of criminal probes in recent months.

Reuters SHB DB1129