Prosecutors on Monday called in the former CEO of Daewoo Shipbuilding & Marine Engineering as part of its expanding probe into allegations that he speculated with trillions of won through accounting fraud.
The Seoul Supreme Prosecutors’ Office said it summoned ex-CEO Nam Sang-tae on charges of breach of trust while the 66-year-old was serving the post from 2006 to 2012.
Former DSME chief Nam Sang-tae answers questions from reporters before being summoned to the Seoul Supreme Prosecutors’ Office in Seoul, Monday. (Yonhap)
Nam is suspected of giving business favors to a contractor called BIDC owned by his close college friend surnamed Jeong. Nam allegedly distributed most of the company’s projects to BIDC and purchased more than 80 percent of the shares of BIDC through DSME’s affiliate when the shipping company was suffering a deficit in October 2009.
Nam also allegedly allowed BICD to take shipping margins between DSME and other shipping trades.
Prosecutors suspected that BICD earned about 12 billion won ($10.2 million) in shipping margins between 2010 and 2013.
In return, Nam received shares of the firm and dividends, investigators said. In addition to Nam, the prosecution is seeking to summon another former chief Koh Jae-ho who served from 2012 to last year after Nam.
Koh is accused of leaving the accounting fraud amounting to 5.4 trillion won over three years.
The prosecution has found that DSME deliberately reduced the cost records of marine plant businesses and shipbuilding projects and exaggerated the operating profits in order to meet the profit goal set by the company’s largest shareholder Korea Development Bank.
Based on the fabricated accounting data, the shipbuilding company took out massive loans from banks and issued corporate bonds.
Investigators suspected that the massive accounting fraud has led to financial damage of over 10 trillion won.
By Lee Hyun-jeong (rene@heraldcorp.com)
