The world’s second largest and South Korea’s leading shipbuilding company, Daewoo Shipbuilding & Marine Engineering Company informed, in a statement to the stock exchange late Friday, that South Korean prosecutors indicted a former chief financial officer for allegedly dressing up the company’s earnings over a three-year period.
The executive had left the company in March last year and was not identified. He has been charged for allegedly reducing costs of offshore projects that were under construction to inflate net income by a combined 2.76 trillion won ($2.4 billion) from 2012 to 2014.
Shares of the shipyard were suspended late Thursday. The company informed that the shares would not be traded until a Korean Exchange committee reviews the matter.
The company informed that prosecutors had arrested two former chief executive officers earlier this year as part of the probe. However, it declined to elaborate beyond what it provided in the regulatory filing.
It further stated that it will improve transparency and strengthen internal oversight to ensure that this won’t happen again.The spokesman for prosecutor’s office in Seoul was not available for comment.
After Daewoo Shipbuilding posted its biggest loss last year on write-offs for delayed projects and creditors extended support with 4.2 trillion won of funds to ease a cash shortage, South Korean prosecutors have been investigating.
The company is among shipyards restructuring after oil prices that have more than halved in the last two years crushed demand. It posted a net loss, excluding minority interest, of 3.19 trillion won in 2015. The company restated its earnings from 2013 on the advice of its auditors to better reflect the write-offs.
Did you subscribe for our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Bloomberg
