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Former Daewoo CEOs admit doctoring books

Posted March. 02, 2001 19:30,   


On the opening day Friday of a trial of Daewoo officials accused of falsifying financial records, four company executives who are under indictment, including Chun Joo-Bum and Yang Jae-Yeol, former presidents of Daewoo Electronics, acknowledged most of the facts of the case but said they had had no intention of using the altered account books to attract loans.

During questioning by prosecutors, Chun said he knew of the alteration of account books and reported this fact to Daewoo chairman Kim Woo-Choong but did not give instructions or receive any reports on the exact amounts involved or the methods that were used. He said the false financial statements were produced at the chairman`s direction and that it would have been difficult to end the practice since it was so deeply entrenched in the conglomerate`s business culture. Responding to accusations that they used the false financial statements to obtain loans from creditors, the defendants said it was a common practice in domestic business circles and that they only did so to prevent Daewoo`s bankruptcy at a time when the conglomerate`s failure would have dealt a serious blow to the Korean economy.

A total of 34 people, including officials of Daewoo`s five affiliates and employees of accounting firms, were indicted last month on suspicion of altering Daewoo financial records to the tune of 41.1 trillion won since 1997 at the instruction of former chairman Kim. They were also accused of receiving 9.9 trillion won in illegal loans and funneling 25 trillion won into foreign bank accounts through financial organizations set up in Britain. Trials of former executives of Daewoo Corp., Daewoo Motor, and Daewoo Heavy Industries are to begin March 13.

Lee Jung-Eun lightee@donga.com