Daewoo Shipbuilding CEO grilled over accounting fraud

All News 10:23 January 17, 2017

SEOUL, Jan. 17 (Yonhap) -- The head of cash-strapped Daewoo Shipbuilding & Marine Engineering Co. was questioned by prosecutors Tuesday over allegations the company cooked the books to cover up its losses.

Jung Sung-leep, 66, appeared before the Seoul Central District Prosecutors' Office as a suspect on charges of violating the Act on External Audit of Stock Companies.

Jung, who took office in May 2015, is suspected of ordering the company to underreport some 120 billion won (US$101 million) in business losses that year, despite his original pledge to break away from the past and to run the company transparently.

Ko Jae-ho, who headed the company from 2012 to 2015, is awaiting a court's ruling Wednesday over allegations he overreported some 5.7 trillion won in net assets between 2012 and 2014.

Ko's predecessor Nam Sang-tae is also standing trial on bribery charges.

South Korean shipbuilders have been under severe financial strain since the 2008 global economic crisis, which sent new orders tumbling amid a glut of vessels and tougher competition from Chinese rivals.

The country's top three shipyards -- Hyundai Heavy Industries, Samsung Heavy Industries Co. and Daewoo Shipbuilding & Marine Engineering Co. -- suffered a combined operating loss of 8.5 trillion won in 2015, with Daewoo Shipbuilding alone posting a 5.5 trillion-won loss.

The shipbuilders have drawn up sweeping self-rescue programs worth 11 trillion won in desperate bids to overcome the protracted slump and mounting losses.