Auditors expose USD1.28bn accounting fraud at Daewoo shipbuilding

An accounting probe launched into the financials of the South Korean shipbuilder Daewoo Shipbuilding & Marine Engineering Co. (DSME) has found an accounting fraud in the amount of some KRW1.5 trillion (USD1.28 billion), The Korea Herald reported.

The inspection also revealed that the company’s management undertook business projects without legitimate procedures.

Furthermore, the shipbuilder’s main creditor Korea Development Bank reportedly failed to conduct proper inspections on DSME’s management.

The results of the accounting investigation were released by South Korea’s Board of Audit and Inspection after the country’s prosecutors raided the ailing shipbuilder’s offices on June 7.

Some 150 officials reportedly seized computer hard drives, accounting books and documents from DSME’s headquarters in Seoul and one of its shipyards on the island of Geoje.

The announcement follows the clearance of the company’s USD 4.47 billion-worth self-rescue scheme, which would see DSME sell two of its five floating docks as it fights to return to liquidity.

The company earlier said that it might have to offload some 14 subsidiaries at home and abroad by 2020 and lay off 1,200 workers in the next five years, along with a cut of up to 20 percent in wages to employees.

As a response to DSME’s self-rescue plan, the company’s unionized workers voted in favor of launching a strike to oppose the current restructuring plan, which would lead to employment uncertainty and could delay a normalization of DSME’s business.

The unionists, who did not specify the date of the planned walkout, requested to be included in the talks on rehabilitation schemes.

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