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Daeho AL and three Korean firms accused of accounting fraud

2018.09.06 11:39:37 | 2018.09.06 13:56:28
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Four Korean companies face a heavy penalty for breaching local accounting rules, including a combined fine of 372.8 million won ($332,027) that could lead to a delisting of one of them.

Daeho AL Co., Lotte Chilsung Beverage Co., Pyeongchang Steel and Infomaster will face fines, outside auditing, dismissal of executives, and criminal charges for accounting violations, the Securities and Futures Commission of Financial Services Commission said on Wednesday.

The regulator fined Daeho AL 267.4 million won after finding it had overstated the equity capital on its consolidated financial statements. The authorities will also impose an external audit on the company for two years and submit the case to prosecution.

Korea Exchange immediately halted the trading of Daeho AL as it falls under the review for possible delisting since the fine exceeds its paid-in capital by more than 5 percent. The shares would remain suspended until the assessment is completed by the end of this month, it added.

Daeho AL, which develops and manufactures core exterior parts and chassis of train car, saw its stock surge in recent months on renewed hopes that it would benefit from future inter-Korean railway connecting projects amid the rapid diplomatic thaw. Shares of the Kospi-listed company, which had hovered around 1,160 won late last year, surged to 7,980 won in early June ahead of the historic U.S.-North Korea summit. But they quickly retreated to the 5,000-won range amid stalled denuclearization talks, closing at 5,420 won on Wednesday.

Lotte Chilsung Beverage, Korea’s largest beverage company, was fined 105.4 million won for underreporting the loss of the equity stake investments of its affiliate, a move resulting in inflation on its net profit and equity capital. Authorities found that its net loss had actually widened from 2.76 billion won to 21.4 billion won as of late-June 2017.

Pyeongchang Steel, guilty of minimizing the allowance for doubtful accounts, is banned from issuing new shares for six months and subject to outside auditing for two years. The watchdog also urged its chief executive to resign.

Infomaster, a PR firm, was accused of inflating the company’s account receivables and window-dressing debt, a breach that has led the regulator to file charges with the prosecution against its CEO and senior executive.

By Jin Young-tae and Kim Hyo-jin

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]



  • Seoul Wed 19 September 2018
  • WED


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