Chung Woo-hyun (C), former head of MP Group, is surrounded by reporters as he leaves the prosecutors’ office in southern Seoul for a detention center following court approval for his arrest on July 6, 2017. (Image: Yonhap)
SEOUL, July 25 (Korea Bizwire) – The founder of a local pizza franchise will face trial on charges of embezzlement and breach of trust worth 15 billion won (US$13.4 million), prosecutors said Tuesday.
The Seoul Central District Prosecutors’ Office has indicted Chung Woo-hyun, ex-head of MP Group, for misappropriating company funds, breach of duty and obstruction of business, it said.
The indictment comes nearly three weeks after Chung was arrested early this month following the court approval on the writ.
The prosecution also indicted his brother and two key officials from MP Group, the holding firm of Mr. Pizza — only identified by their last names Chung and Choi — on similar charges without detention.
Mr. Pizza is an indigenous brand launched by Chung in 1990. It has grown into one of the top three pizza chains in the country, currently running over 300 stores nationwide and some 140 branches in China.
Chung recently resigned from the top post after prosecutors began an investigation last month, but has denied any wrongdoing.
The suspicions came to the spotlight in March after a former franchisee in Incheon, west of Seoul, committed suicide, blaming the pizza chain for driving his restaurant into the ground. He apparently claimed that the headquarters opened a direct store next to his business as payback for cutting off the contract.
Chung is accused of siphoning off some 9.17 billion won worth of company funds and inflicting some 6.46 billion won in losses on its contracted stores.
The prosecution believes that Chung forced its franchisees to buy the cheese for pizzas only from two distributors that are owned by his relatives from late 2005 to March this year, pocketing 5.7 billion won along the way.
He is also alleged to have misappropriated some 570 million won collected from the franchisees for advertising from 2008 to early 2015.
Other charges include letting his family and relatives get paid salaries totaling 2.9 billion won when they didn’t actually work for the company.
The prosecution claims that the illicit profits were spent on Chung and his family’s lavish life, accompanied by expensive golf course and hotel memberships, and overseas travels.
“MP Group is a listed company with over 11,277 retail shareholders,” the prosecution said.
“Yet (Chung) has privatized the firm to his own benefit.”
(Yonhap)
