Financial Services Commission Fines STX and STX Marine Service 3.7 Billion Won for "Accounting Standards Violations"
Omission of Provisions for Overseas Lawsuits
Evidence of Obstruction of External Audits Confirmed
The Financial Services Commission announced on the 17th that it had decided to impose a total fine of 3.66 billion won on STX and its subsidiary, STX Marine Service, for failing to record provisions related to overseas lawsuits in their business reports and for not disclosing litigation details to external auditors.
The Financial Services Commission held a regular meeting on this day and stated that the two companies had violated accounting standards by preparing and disclosing financial statements improperly. As a result, it decided to impose fines of 2.01 billion won on STX and 1.21 billion won on STX Marine Service.
The CEO of STX was fined 200 million won, and both the former and current CEOs of STX Marine Service were each fined 120 million won, totaling 240 million won in fines.
The Financial Services Commission imposed severe disciplinary measures on STX, including the appointment of an auditor for three years, a recommendation for dismissal and a six-month suspension of duties for the CEO, notification to the prosecution, and corrective orders. For STX Marine Service, the commission ordered the appointment of an auditor for three years, a recommendation for dismissal equivalent to the former CEO, a recommendation for dismissal and a six-month suspension of duties for the former executive (current CEO), prosecution referral, and corrective orders.
STX Marine Service, a subsidiary of STX, failed to reflect 97.6 billion won in lawsuit-related provisions in its 2022 business report’s financial statements. In addition, contingent liabilities were not disclosed in the notes. The Financial Services Commission pointed out that STX Marine Service did not disclose information on overseas lawsuits it had lost, as well as ongoing litigation, in its financial statements.
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There was also evidence of obstruction of external audits. STX excluded information on overseas lawsuits involving its subsidiaries from the litigation details provided to external auditors, thereby preventing auditors from conducting proper audit procedures. Similarly, STX Marine Service submitted incomplete materials to auditors, omitting information on overseas lawsuits it had lost and ongoing cases. The Financial Services Commission stated, "By preventing auditors from confirming litigation details of subsidiaries, the companies hindered the proper external audit process."
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