The chairman of Hyundai Motor Company was sentenced to three years in jail today for embezzling funds from the world’s sixth largest carmaker.

Chung Mong-koo, 68, was convicted last month of setting up an illegal slush fund and spending 70 billion won (£38 million) of company money on private purchases and paying political lobbyists to secure government favours.

This morning Judge Kim Dong-oh said his Mr Chung’s actions were “clearly criminal acts” that “greatly undermined” South Korea’s business culture.

But the judge rejected calls from prosecutors for Mr Chung be sentenced to six years in jail, noting that he deserved a more lenient sentence because of his “big contributions to the development of the country’s economy”.

No date has been set for when Mr Chung must report to jail and Hyundai said he will retain “full operational control” of the business while he appeals the decision.

However, Mr Chung, who was detained for two months following his arrest last April, may avoid spending further time behind bars. South Korean appeal courts have reduced sentences in several recent business crime cases including that of Chay Tae-won, chairman of oil refiner SK Corporation, whose three year jail term was suspended on appeal in 2005.

Mr Chung was also convicted of inflicting financial damage on affiliates through questionable deals designed to further his own interests.

Three other Hyundai executives convicted of similar charges were this morning given suspended sentences.

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