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Fraud charges for Daewoo founder

Date Class
1st Jul 2005 Fraud Investigation
 
Details
South Korean prosecutors have charged the founder of one of the country's biggest industrial groups with fraud.

Kim Woo-Choong is accused of falsifying the books at the Daewoo Group and procuring loans under false pretences.

The group collapsed in 1999 under debts totalling more than $80bn (45bn) and Mr Kim fled the country, only returning last month.

Daewoo now exists as a car brand owned by General Motors, while its creditors have taken over its other businesses.

Daewoo started out as a small textile firm, bought by Mr Kim - who is now 69 - for $5,000 in 1967.

Over the succeeding three decades, Mr Kim turned it into one of South Korea's most powerful industrial conglomerates, or "chaebols", with tight links to other business leaders and top politicians

At its height, it employed 320,000 people in 110 countries.

But the company found itself in difficulties in the 1990s after years of heavy borrowing to keep its expansion on track.

The Asian financial crisis of 1997 was the last straw, knocking the company's fragile financial foundations out from under it.

If convicted of the charges - which include illegally seeking 10 trillion won ($.97bn; 4.5bn) in loans, diverting 23 trillion won into overseas accounts and false accounting amounting to 43 trillion won - he could face from five years to life in prison.

But judges have been lenient to business leaders in this kind of trouble, giving amnesties in recent high profile cases.

And experts believe that with South Korea's economy again stuttering, the government is keen to keep relations with business on good terms

Earlier in June, the High Court suspended a three-year jail sentence against another chaebol boss, Chey Tae-won, chief executive of oil importer SK Corp.

Although the judges upheld the guilty verdict, they felt jailing Mr Chey conflicted with his "main responsibility, to run his company in future".

 

 

 


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