[THE INVESTOR] Prosecutors have found evidence that embattled Daewoo Shipbuilding & Marine Engineering illegally raised money amounting to 10 trillion won ($8.6 billion) through accounting fraud, according to local news reports on Thursday.
The prosecutors have placed travel bans on two former chief executives Nam Sang-tae and Koh Jae-ho of the world’s second-largest shipbuilder.
The prosecution’s special force for anticorruption had secured evidence after raiding 10 organizations on Wednesday including the headquarters of DSME, its main creditor Korea Development Bank and accounting firm Deloitte Anjin.
“The DSME needed thorough investigation as it used massive public funds like state-run organizations,” said a local news media outlet which quoted a source from the special force.
Prosecutors are also investigating whether Korea Development Bank was involved in the corruption charges of top management and the accounting fraud of DSME.
The special force reportedly secured a management consulting report published in 2012 by KDB as well as the bank’s audit report made in 2015, which stated the creditor’s responsibility to manage DSME’s poor management. Although the reports pointed out that the internal audit function did not work well, KDB did not reportedly make necessary actions.
The probe came as the audit committee of Daewoo Shipbuilding had filed a petition in January with the Seoul Central District Prosecutors’ Office and the Changwon District Prosecutors’ Office seeking an investigation into the former managing board’s responsibility in poor management.
Since September, some 420 shareholders have raised compensation suits against the company and its former CEO Ko with the Seoul Central District Court. The total amount of compensation sought hovers around 24 billion won, according to legal sources.
By Shin Ji-hye (
shinjh@heraldcorp.com) and news reports