Business as usual at Hyundai CR as Chairman Chung sentenced to prison

The sentencing of the chairman of Hyundai Motors has rocked South Korea and sent shockwaves through the car world. Chung Mong-koo was sentenced to three years in prison on Monday for embezzlement and breach of trust. Mr Chung - who vowed to appeal - is accused of feathering his nest with a multi-million dollar slush fund, which was also used to bribe politicians. The case is being keenly watched here in the Czech Republic, where work has begun on a huge Hyundai car plant.

The grim face of Chung Mong-koo features on all the front pages in South Korea on Tuesday, but the story is also receiving prominent attention here in the Czech Republic. That's because Hyundai has recently begun work on a massive new car manufacturing plant in Nosovice, not far from the town of Frydek-Mistek in North Moravia. The company is planning to invest around a billion euros in the plant - making it the single largest investment in the country since the fall of communism.

At present bulldozers are completing the task of removing the topsoil at Nosovice, so work on the plant itself can begin in March, providing a construction permit has been issued. The head of PR at Hyundai Czech Republic, Petr Vanek, told Radio Prague the case against Mr Chung had had no effect whatsoever on the project.

"The actual development of the case with Chairman Chung in Seoul really does not have any direct impact on the implementation of our project, the construction of a Hyundai motor manufacturing plant in the Czech Republic, in Nosovice. Hyundai Motor Manufacturing Czech is an independent company, of course it's a sister company in the group. So the case of Chairman Chung does not have any direct impact on our development here."

The plant will provide jobs for around 2,900 people when it enters its mass production phase in 2009, and will churn out around 200,000 cars a year. Many more people will be employed as local suppliers. So much is at stake, for both Hyundai and the Czechs. Not everyone is convinced that if Mr Chung does go to prison, the company will be able to just steam ahead with all of its plans as if nothing had happened. Lyle Frink writes for Automotive News Europe.

"When he was arrested, it put the negotiations for the Nosovice site on ice, or at least held it back for a couple of months. However, Hyundai as a car group does need a European manufacturing site, and that is an intrinsic part of their long term goal. So, yes, they will build the plant here, however some of the decisions might be slowed down, just because managers aren't used to having the responsibility to make decisions on their own."

Chairman Chung has expressed his wish to attend a belated ceremony in Nosovice this spring. Petr Vanek from Hyundai says as far as he's concerned, Mr Chung will be there. Obviously if he's sitting in a jail cell in Seoul, he's not going to make it. So far the South Korean courts have allowed Mr Chung to continue running Hyundai as he fights his appeal. If he loses that appeal, things could be rather different.