DSME's Ex-CEO Brought In for Questioning

Nam Sang-tae (file image)

By MarEx 2016-06-28 05:37:26

Prosecutors in South Korea have called in former DSME CEO Nam Sang-tae for questioning relating to alleged breaches of trust during his six-year tenure in the top post.

Officials contend that Nam directed contracts to Busan International Distribution Center (BIDC), a firm owned by a college friend, and allowed it to take $10 million in transportation "shipping margins" over 2010-2013; he allegedly received dividends and BIDC stock in return. 

Nam told reporters that he "will fully cooperate with the prosecutors' investigation."

The majority stakeholder of BIDC has already been arrested and charged with embezzlement, negligence and forging of evidence. 

Nam's successor, Koh Jae-ho, is under investigation in connection with an alleged large-scale accounting fraud. Prosecutors raided DSME's headquarters and confiscated records which allegedly show that the firm's accountants overstated DSME's profitability by more than $4 billion over three years. Officials believe that the alleged fraud was committed in order to meet earnings targets set by DSME's largest creditor, state-owned development bank KDB. The overstated profits allowed DSME to secure billions in loans which it might not otherwise have been able to access – but which it now faces difficulty in repaying.

"We believe the fraudulent accounting happened so that management could secure bank loans, sell company bonds, invest in the stock market, or receive a bonus," a prosecutor told Yonhap News. 

Separately, DSME said Monday that it had secured a refund guarantee from KDB for the ten percent down payment on $580 million worth of LNG carriers and VLCCs recently ordered by Angelicoussis Shipping. The guarantee would repay the down payment in the event that DSME cannot deliver the vessels. "Obtaining [the guarantee] proves that DSME is operating normally," a spokesman told Korea Times.