More Charges Laid Against Former DSME CEO
Another former CEO of Korean shipyard Daewoo Shipbuilding & Marine Engineering (DSME) now faces corruption charges: Nam Sang-tae, 66, is currently in custody and standing trial for bribery.
The new charges relate to suspicions he was responsible for inflicting around $25 million in losses on the shipyard, prosecutors said, by making decisions based on his ties with certain acquaintances.
Yonhap news agency reports that the charges relate to allegations he gave kickbacks to acquaintances of Kang Man-soo, former head of the state-run Korea Development Bank, the company’s largest shareholder.
DSME is facing a number of legal challenges at present. Earlier this month, its current CEO and president, Jung Sung-leep was summoned by prosecutors to answer questions about whether he may have hidden $100 million in operating losses, and former CEO Ko Jae-ho received a 10-year sentence on charges of accounting fraud. Song Hee-young, a former chief editorial writer of South Korea's top daily Chosun Ilbo, has also been indicted over allegations he received bribes in return for writing favorable stories for DSME.
Additionally, the yard lost a lawsuit brought by competitors Hyundai Heavy Industries and Samsung Heavy Industries over patents for reliquifying LNG boil-off gas, a technology that has given DSME a competitive edge in construction of LNG carriers.
DSME had registered two patents on its re-liquifaction technology in early 2014. The yard's system takes the boil-off gas from an LNG carrier's cargo tanks, an unavoidable byproduct of shipping the chilled liquid, and compresses it once more to lower the rate of cargo loss. HHI and SHI contended that the technology was already in widespread use and did not qualify for intellectual property protections, but a review board initially ruled in DSME's favor. HHI and SHI appealed, and the Patent Court of Korea decided that DSME's patent registration should be annulled. DSME plans to appeal the decision to Korea's supreme court.
The Korean shipbuilding industry has been hit hard by the downturn in the shipping market; new orders have plummeted and many buyers have tried to delay or cancel deliveries. The finance ministry predicts that 56,000 to 63,000 workers in shipbuilding alone will be affected by restructuring and job cuts by the end of this year.
Last week, DSME released plans to implement 2.5 trillion won ($2.14 billion) worth of self-rescue measures this year. The yard plans to cut its workforce by about 2,000 this year to 8,500 and to accelerate its divestment of non-core business units such as its IT division. It also plans to sell assets including buildings and floating docks.