Yoo Byung-un, 73, was found dead in a plum orchard in June, but his body was not identified for more than a month, despite him being wanted in connection with the sinking of the Sewol ferry, with 476 passengers and crew on board.
Around 300 people drowned in South Korea's worst maritime accident in decades, while 172 survived.
Most of the victims were children on a school trip. The tragedy caused an outpouring of nationwide grief, and the government of President Park Geun-hye was heavily criticised for the ineffective response to the disaster.
Yoo was the head of the family that owned the ferry operator's holding company. He was accused of a range of questionable activities that included embezzlement and negligence that prosecutors believe led to the ferry disaster.
The coffin holding his body was brought to a sprawling rural compound of the Evangelical Baptist Church about 80 kilometers south of Seoul, as church members streamed in to attend the two-day funeral service.
The service was closed to outsiders and the news media. The interment will take place on Sunday.
"He will be buried on a mountain inside the complex, which will be 5-10 minute walk from his father-in-law's grave," said Lee Tae-jong, a church official. Yoo had co-founded the church, along with his later father-in-law.
"Yoo was our mentor who taught about the Bible and loved nature and our country. I feel so sad to see him becoming feed for maggots," a church member said, requesting anonymity.
"There will be a judgement by God some day."
ARRESTS, HOMICIDE TRIAL
The Sewol ferry capsized and sank after trying to make a sharp turn while on a routine journey from Incheon on the mainland to the southern holiday island near the southwestern coast. It was later found to be structurally defective and overloaded.
On trial for homicide along with three crew members, the ferry's 68-year-old captain Lee Joon-seok took the stand for the first time this week. He told the court he was just following established practice in not making safety checks before the vessel set off, Yonhap news agency reported.
Authorities have arrested or questioned Yoo's family members and associates of the Christian sect, but have failed to unlock the circumstances surrounding his death.
Investigators looking to capture him continued on with the country's largest manhunt with a reward of 500 million won, the highest allowed under criminal law, unaware his body was near a cabin they had searched, next to a cover of a book he had written and empty bottles of alcohol.
Yoo's wife, brothers and oldest son have been arrested on charges including embezzlement but were granted temporary release from detention so that they could attend the funeral.
But, his younger son, Yoo Hyuck-ki, remains at large and is believed to be overseas.
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