Shareholders file collective suit against Daewoo Shipbuilding

A group of 119 minority shareholders filed a class action suit against Daewoo Shipbuilding & Marine Engineering Co. on Wednesday, demanding 4.1 billion won (US$3.47 million) in compensation for losses from an investment made based on the company’s doctored financial statement.

The plaintiff filed the suit with the Seoul Central District Court, claiming the shipbuilder exaggerated profits in the 2014 financial statement by lowering production costs and hiding losses.

They also held Deloitte Anjin LLC, the Korean operation of Deloitte Touche Tohmatsu, and former CEO Ko Jae-ho accountable for lax provision.

“Daewoo Shipbuilding & Marine Engineering, the former CEO and Deloitte Anjin are responsible for compensating losses by the plaintiff who invested in the company, believing that its financial statement is correct,” their counsel said in a statement.

The accusers are some of the investors who bought Daewoo’s shares after the company released its 2014 financial report on March 31. Its shares tumbled 30 percent to 8,750 won on July 15 after its financial fraud first surfaced in the local media. This year, Daewoo’s shares plunged 66 percent.

In the second quarter, the nation’s No. 2 shipyard posted a record loss due to increased costs from a delay in the construction of low-priced ships and offshore facilities.

Net loss stood at 2.39 trillion won in the April-June period, a sharp turnaround from a 76 billion-won profit during the same period a year earlier.  (Yonhap)