A Seoul court on Wednesday turned down prosecutors' request for a warrant to arrest the chairman of Himart Co., a major South Korean home appliance retailer, on the charges of embezzlement and corporate malpractice.

Sun Jong-koo has been under investigation on his suspected role in stashing company funds overseas to transfer wealth to his offspring without paying due taxes and allegedly signing a back-door deal with the local business group Eugene Corp. to secure managerial rights and receive favors.

However, the Seoul Central District Court said Sun should be guaranteed the right to defend himself, because prosecutors'

explanation for his criminal charges is insufficient and can be legally disputed. The court also noted that he could face trial without physical detention.

The prosecutors summoned Sun twice last week over his alleged offshore tax evasion schemes, which include establishing paper companies in European tax havens like Luxembourg and the Netherlands in a bid to hide corporate funds and his personal wealth of over 100 billion won (US$89 million).

The chairman of Eugene, Yu Kyung-sun, also appeared before prosecutors several times in early March for questioning over the alleged deal when the company acquired Himart in 2007.

On being released from prosecutors' custody, the Himart chairman did not make any comments to reporters.

On the other hand, the court issued a warrant on the same day for the arrest of Himart's vice chairman, Kim Hyo-joo, on the charges of accepting bribes worth 1 billion won from the company's subcontractors. (Yonhap News)