Financial authorities in South Korea have found that the operating loss posted by Daewoo Shipbuilding & Marine Engineering (DSME) in its 2015 results was greater than was disclosed in its financial statements, reports say.
The discovery has led the leader of Korea’s opposition party to question the amount of financial aid granted by the state to rescue the ailing shipyard.
The shipyard reported an operating loss of KRW 3.2tr ($2.9bn) during the first half of 2015, but an additional loss of KRW 3.1tr ($2.8bn) was uncovered through due diligence conducted for 10 weeks starting in July last year, said Rep. Sim Sang-jung, the head of the Justice Party.
“Financial authorities found that the shipbuilder has spearheaded an accounting fraud, but they extended a large amount of financial aid,” she said, quoted by the Yonhap news agency. “They should explain why such a large amount of aid was extended to Daewoo Shipbuilding.”
Sim said the Korean government had conspired to cover up the “fraud” by granting financial aid of KRW 4.2tr ($3.8bn) to the shipyard in October – almost double the KRW 2.4tr ($2.2bn) needed to rescue the yard.
DSME’s main creditor, state-run Korea Development Bank, and Korea’s financial regulator, the Financial Services Commission, have denied Sim’s claims.