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The corporate sector is paying close attention to a Seoul court’s upcoming verdict on former STX Group chief Kang Duk-soo over his business malfeasance charges, while the prosecution and the group’s subcontractors differ in their assessment of his “irregularities.”
The Seoul Central District Court is scheduled to rule on the case Thursday, which alleges that the ex-STX chairman orchestrated the group’s irregularities including accounting fraud worth more than 2 trillion won ($1.9 billion), embezzlement and tricky loan application.”
Earlier this month, the prosecution asked the court to sentence Kang to 10 years in prison, arguing that the former chief dealt a critical blow to the group as he took the initiative in the wrongdoing.
But CEOs of 83 suppliers of STX Group filed a joint petition with the court, pleading for mercy. They said that Kang acted in a desperate bid to normalize the management conditions of the debt-saddled group
Though his decision, involving irregular funding to the group’s subsidiaries, ultimately damaged the entire group, it was the best choice he had under the prevailing situation, with the shipbuilding and energy-oriented conglomerate facing a liquidity crisis, they said.
He has been charged with irregularly funding units, such as STX Construction, ForceTec and his individually owned firms, by misallocating group funds totaling 55.7 billion won. Further, he has been accused of having borrowed 900 billion won from financial firms by doctoring the group’s financial statements.
According to the prosecution, Kang committed large-scale accounting fraud from 2008-2012 by inflating the salaries of company executives. Exploiting the concocted financial statements, the group could reportedly receive loans from some financial firms and issue corporate bonds.
Charges against Kang include embezzlement, fraud, negligence of duties and violation of the law on securities and exchange, according to the prosecution.
The shipbuilding conglomerate, which has 10 business units, has undergone financial turmoil due to liquidity shortages and huge debts, apparently caused by the global downturn in the shipbuilding and shipping sectors.
Kang headed the group from 2003 and stepped down after mounting pressure from creditors in September 2013.
By Kim Yon-se (kys@heraldcorp.com)
The Seoul Central District Court is scheduled to rule on the case Thursday, which alleges that the ex-STX chairman orchestrated the group’s irregularities including accounting fraud worth more than 2 trillion won ($1.9 billion), embezzlement and tricky loan application.”
Earlier this month, the prosecution asked the court to sentence Kang to 10 years in prison, arguing that the former chief dealt a critical blow to the group as he took the initiative in the wrongdoing.
But CEOs of 83 suppliers of STX Group filed a joint petition with the court, pleading for mercy. They said that Kang acted in a desperate bid to normalize the management conditions of the debt-saddled group
Though his decision, involving irregular funding to the group’s subsidiaries, ultimately damaged the entire group, it was the best choice he had under the prevailing situation, with the shipbuilding and energy-oriented conglomerate facing a liquidity crisis, they said.
He has been charged with irregularly funding units, such as STX Construction, ForceTec and his individually owned firms, by misallocating group funds totaling 55.7 billion won. Further, he has been accused of having borrowed 900 billion won from financial firms by doctoring the group’s financial statements.
According to the prosecution, Kang committed large-scale accounting fraud from 2008-2012 by inflating the salaries of company executives. Exploiting the concocted financial statements, the group could reportedly receive loans from some financial firms and issue corporate bonds.
Charges against Kang include embezzlement, fraud, negligence of duties and violation of the law on securities and exchange, according to the prosecution.
The shipbuilding conglomerate, which has 10 business units, has undergone financial turmoil due to liquidity shortages and huge debts, apparently caused by the global downturn in the shipbuilding and shipping sectors.
Kang headed the group from 2003 and stepped down after mounting pressure from creditors in September 2013.
By Kim Yon-se (kys@heraldcorp.com)
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