Prosecutors Indict Kim Yong-bin, Chairman of Daewoo Shipbuilding & Marine Engineering, and Others for 28.5 Billion Won Unfair Gains

The prosecution has indicted Kim Yong-bin, chairman of Daewoo Shipbuilding & Marine Engineering Construction (50), and related parties including the CEO of Korea Corporation for illicit gains of 28.5 billion KRW through fraudulent unfair transactions.

Source=Seoul Southern District Prosecutors' Office

On the 14th, the Joint Investigation Unit on Financial and Securities Crimes of the Seoul Southern District Prosecutors' Office (headed by Dan Seong-han) announced that Kim, who is charged with violating the Capital Markets Act and embezzlement and breach of trust under the Act on the Aggravated Punishment of Specific Economic Crimes, was arrested and indicted. Nine others, including the CEO (59) and vice president (60) of Daewoo Shipbuilding & Marine Engineering Construction, the CEO (50) of Korea Corporation, and facilitators of the nominal subscription for capital increase, were also indicted without detention.

According to the prosecution, Kim and others are accused of fraudulent unfair transactions by raising private loan funds in December 2018 to avoid Korea Corporation, a call center operation outsourcing company, from being designated as a management item, conducting a disguised paid-in capital increase, and making false disclosures claiming entry into the bio-business. Kim and others sought to avoid the risk of losing management rights as Korea Corporation faced the possibility of trading suspension if designated as a management item.

The prosecution stated that Kim and others obtained illicit gains of up to 28.5 billion KRW through this scheme. They are also accused of embezzling 5 billion KRW of Korea Corporation’s funds to repay the borrowed private loans.

Kim and CEO A of Korea Corporation are also charged with breach of trust for causing a loss of approximately 21.1 billion KRW by having Korea Corporation purchase high-priced shares of an unlisted company with no value to inflate the value of the bio-business, which was used as a means to boost the stock price.

At the time, Daewoo Shipbuilding & Marine Engineering Construction was unable to pay employee salaries, but Kim and others are accused of embezzling 400 million KRW of corporate funds by purchasing luxury goods with corporate cards and privately using Porsche vehicles leased under the company’s name. They are also charged with breach of trust for providing joint guarantees on private loans of 5 billion KRW unrelated to Daewoo Shipbuilding & Marine Engineering Construction.

[Image source=Yonhap News]

Due to Kim and others, Korea Corporation, which was listed on KOSDAQ, was delisted, and Daewoo Shipbuilding & Marine Engineering Construction entered rehabilitation proceedings. Korea Corporation’s market capitalization peaked at 107.8 billion KRW in January 2019 but fell to 4.2 billion KRW following the delisting decision in January last year. It is currently suspended from trading due to an injunction suspending the rights of minority shareholders.

The prosecution stated, "(Kim and others) meticulously planned in advance the methods of raising and repaying private loans, committed large-scale embezzlement and breach of trust to use the bio-business as a means to boost stock prices, and shopped for luxury goods with corporate cards of a company in financial distress," judging this case not as a simple stock manipulation case but as a comprehensive corporate corruption case.

The prosecution received the case from the Financial Supervisory Service via fast track in August 2021. In March and February of last year, they conducted raids on the offices of Korea Corporation and Daewoo Shipbuilding & Marine Engineering Construction, respectively. Last month, they requested an arrest warrant for Kim, who was indicted while in custody.

The prosecution stated, "The Seoul Southern District Prosecutors' Office, as a specialized financial crime prosecution office, will closely cooperate with related agencies and respond with swift and strict investigations into financial and securities crimes to establish a fair trading order in the capital market."

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