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S. Korean Daewoo Shipbuilding's former CEO summoned on accounting fraud

Xinhua, July 4, 2016 Adjust font size:

Former chief executive of Daewoo Shipbuilding & Marine Engineering, one of South Korea's top three shipbuilders, was summoned by prosecutors on Monday for questioning on suspicion of trillions of won (billions of U.S. dollars) of accounting fraud.

Koh Jae-ho, 61, who headed the troubled company from 2012 to 2015, appeared in the Seoul Central Prosecutors' Office to be questioned about whether he ordered the manipulation of account books, after his predecessor Nam Sang-tae was arrested last week.

Koh has been accused of ordering a 5.4 trillion-won (4.7 billion U.S. dollars) accounting fraud to overstate operation profits from 2012 to 2014 by underestimating production costs in offshore energy projects such as oil rigs and drilling ships.

Daewoo Shipbuilding posted operating profits of 440.9 billion won in 2013 and 471 billion won in 2014 each, but the company earlier this year restated operating losses of 778.4 billion won in 2013 and 742.9 billion in 2014 to reflect write-offs from the offshore energy projects.

Based on the rigged financial statements, the company offered about 200 billion won in bonus for executives and workers for the two years, while doing damage worth tens of trillions of won to investors by selling corporate bonds and bills. Endi