Minor Shareholders Won the Sue against Daewoo Electronics

The court acknowledged for ex-executives of Daewoo, accounting company and auditing company to be responsible for the investors damaged financially from window-dressing.

This decision is the first case of 7 sues by minor shareholders. So is expected to affect on the sue Korea deposit Insurance Corporation is preparing against other Daewoo subsidies for billions of billions won.

Section 21 of Seoul Civil Court (Shon Tae-ho Senior judge) sentenced at 12th “5 investors believed in pseudo operation, auditing based on window-dressing and were damaged financially. So 18 defendants including Kim Woo-jung, ex-chairman of Daewoo, Daewoo Electronics & its ex- executives, Ahnjin Accountants, auditing companies, etc should compensate of 360 million won.”

The court commented, “Even the ex-executives insist that they believed in the auditing results, and didn’t know about pseudo operation report, but they are acknowledged for having involved in making the report and they didn’t their obligation of supervision sincerely as the members of the board of directors.”

The court commented about Ahanjin Accountants, “The accountants didn’t performe their obligation sincerely by missing proper reviews of accounting books, and omitting additional auditing.”

7 ex-executives including Yang Jae-yul, Chun Ju-bum, and others are sentenced of prison and penalty of 26 trillion won for involving in window-dressing of 40 trillion won by commanding of Kim Woo-jung ex-chairman. However, they are preparing the petition of appeal.

Seoul Civil Court performs 7 cases including 24 billion won compensation sued by Chamyu Yundae and minor shareholders in 1999, and 6 cases of compensation against Daewoo subsidies, ex-executives, Sandong Accountants and Ahanjin Accountants by 500 small investors.

Jung-Eun Lee lightee@donga.com