Hyundai’s hard road

UPDATE The head of Hyundai Motor was sentenced to three years in jail for embezzling funds from the world's No. 6 auto maker, dealing another blow to a company battling a rising won and restive labor unions. The surprise ruling — the expectation was that Hyundai Motor Chairman Chung Mong-koo would get a suspended jail sentence — initially sent shares in the country's top carmaker down over 3 percent on Monday as investors worried about a management vacuum. Chung, 68, wearing a dark gray suit, appeared shaken after the verdict. He quickly left the courtroom, which was filled to capacity with Hyundai group employees, including Chung's son, Chung Eui-sun, the president of sister company Kia Motors Corp.

02/04/07 The name on the court docket reads Chung Mong-koo, but it may be the company he leads that's on trial. Chung, the 68-year-old chairman of Hyundai Motor Co., faces sentencing Monday for embezzlement and misappropriation of corporate funds. He could receive a six-year jail term.

For Hyundai, his legal troubles could hardly come at a worse time.

Despite earning top quality ratings in American customer surveys, outranking even Japanese rivals Toyota Motor Corp. and Honda Motor Co., Hyundai saw sales flatten last year. Profit skidded 35%, hurt by chronic labor strife, currency exchange fluctuations and reluctance on the part of many American and European buyers to shell out large sums for Hyundai cars and trucks.

Now Chung, who engineered the automaker's transition from industry also-ran to a $29-billion-a-year empire selling in every region of the world, faces an uncertain future.

"Hyundai Motor relies on one man. Only he has power to control management," said Stephen Ahn, an auto analyst at Woori Investment & Securities in Seoul. More at LA Times