Daewoo Shipbuilding Loses First Trial for 'Bunsik Fraud'...Court Orders Total Compensation of 61.2 Billion Won

[Asia Economy Reporter Kwon Jae-hee] Daewoo Shipbuilding & Marine Engineering, whose officials were convicted of accounting fraud and fraudulent loans, has been ordered to pay a large amount of damages to institutional investors.

According to the legal community on the 7th, the Seoul Central District Court Civil Division 30 (Presiding Judge Han Seong-su) ruled that Daewoo Shipbuilding, former CEO Ko Jae-ho, and former CFO Kim Gap-jung must pay 41.3 billion KRW to the National Pension Service, with 15.3 billion KRW of that amount to be borne by Anjin Accounting Corporation.

Additionally, Daewoo Shipbuilding, former CEO Ko, and former CFO Kim were ordered to pay 5.7 billion KRW to the Teachers' Pension Service and 2.9 billion KRW to the Government Employees Pension Service.

The same court's Civil Division 31 (Presiding Judge Kim Ji-sook) also ruled partially in favor of the plaintiffs, ordering Daewoo Shipbuilding, former CEO Ko, and former CFO Kim to pay approximately 11.2 billion KRW to the state operating the Korea Post.

The total amount awarded to institutional investors amounts to approximately 61.2 billion KRW.

In July 2016, institutional investors including the National Pension Service and the Teachers' Pension Service filed a damages lawsuit against Daewoo Shipbuilding & Marine Engineering, its former executives, and Anjin Accounting Corporation, citing accounting fraud.

According to the Capital Markets and Financial Investment Business Act, if false statements or omissions are found in business reports or quarterly reports causing losses to holders of the corporation’s securities, those who directed or were directors must bear liability for damages.

Daewoo Shipbuilding was investigated for committing accounting fraud from 2012 to 2014 and failing to reflect losses in financial statements. Subsequently, former CEO Ko and former CFO Kim were sentenced to 9 years and 6 years in prison, respectively.

The judges in both cases stated, "Ko Jae-ho and Kim Gap-jung committed accounting fraud by falsifying Daewoo Shipbuilding’s financial statements and disclosing semi-annual and quarterly reports attached with these false financial statements," adding, "Daewoo Shipbuilding is responsible for compensating the plaintiffs (institutional investors) for damages caused by the accounting fraud."

This content was produced with the assistance of AI translation services.