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Ex-Daewoo Shipyard Head Gets 10 Years in Prison

Maritime Activity Reports, Inc.

January 18, 2017

Ko Jae-ho, the former head of the ailing South Korean shipbuilder Daewoo Shipbuilding and Marine Engineering (DSME), has been sentenced to 10 years in prison by a lower court in Seoul over accounting fraud, Yonhap News Agency reports.

The Seoul Central District Court found Ko Jae-Ho guilty of manipulating the company's books in 2013 and 2014, when he was the CEO, and using them to raise bank loans.
Ko Jae-Ho's punishment epitomises the decline of Daewoo, which was once one of the country's biggest conglomerates, or chaebol.
"It seems that Ko was aware that there was extensive accounting fraud to make up for operating losses and achieve the operating profit target," the court said in its ruling. "Overall, his intentionality about the fraud is sufficiently recognized, and (he) is responsible for his failure to redress it." 
After his inauguration in 2015, Jung has been taking the lead in restructuring and normalizing DSME through support from creditors.
In July, Ko was indicted on charges of over-reporting some 5.7 trillion won ($5 billion) in net assets from 2012 to 2014 by under-reporting the production cost or neglecting losses suffered by the firm's affiliates.
Based on the higher credit rating unlawfully earned by doctoring its books, the shipyard allegedly received some 21 trillion won in loans between 2013 and 2015, according to prosecutors.

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