Spread of KOSDAQ Supply Fraud Repercussion

It is in doubt that KOADAQ-listed companies dishonored a bill on purpose by inflating their sales prearranged between them. The fact that these companies have accommodated a large amount bill was found out, and so it is worried about chain reaction bankruptcies.

The company listed on KOADAQ, SoftWin has dishonored the bill in the black because it didn’t receive money from RF Logic on October 29. However, the fact that RF Logic is the large shareholder of SoftWin was disclosed on November 1. RF Logic was already bankrupted on October 18. Both of companies inflated their sales falsely and so suspicion of sales fraud and purposed bankruptcy was aroused.

In addition, Acorn, KOADAQ-listed firm, which was bankrupted on October 31, also was involved in the incident. So, its effects got larger. As suffered firms received the bill from these two companies have appeared, dozens of companies face a crisis.

▽ Summary of the Case 〓RF Logics has purchased the equipments at a level of hundreds of billions won from tens of IT firms including SoftWin and Acorn and paid by draft. However, when RF Logic was bankrupted last month, all officials disappeared. The effects of the bankruptcy overthrew SoftWin and Acorn.

SoftWin and Acorn looked like the suffered firms which were bankrupted because they didn’t receive money from RF Logic. But, the large shareholder of Softwin is RF Logic. In a document, an official large shareholder was ‘Happy Money’, but it sold its stocks to RF Logic on April without reporting to Financial Supervisory Service (FSS).

RF Logic has purchased the information technology equipments priced at 9.2 billion won from SoftWin. The company’s officials estimated that RF Logic was likely to manipulate the business performance of SoftWin which was its affiliate.

It was confirmed that bankrupted SoftWin and Acorn increased the sales by buying and selling their products each other. Acorn has supplied the computer hardware equipments for 3.4 billion won to SoftWin this year.

It is suspicious that two companies have obtained the increasing sales from May. Both of companies increased the sales against several small companies, which were established with a capital of 0.1 billion in May.

▽Worry on the Spread 〓 The problem is that the accident will not be finished by the bankruptcy of three companies. There are 60 suffered companies which haven’t received the costs after supplying their products and equipments to three firms.

In particular, RF Logic has purchased the equipments for hundreds of billion won from other companies this year and paid by draft. Then, it dishonored the bill.

Including Soft Bank Korea (SBK), Daou data systems, Comtel System, M-Plus Tech and Korea Hinet, IT-related companies haven’t received money from RF Logic.

In a securities market, the money which the suffered companies have to receive from RF Logic reaches the level of 300 billion ∼500 billion won. Out of bills of RF Logic, a maturity date of 80% bills is ranged from this month to next May. Accordingly, the related companies are highly likely to be bankrupted.

Several securities companies have understood its seriousness which RF dishonored the bill last month, and collected the funds invested to the related companies such as Softwin and Acorn immediately.

The official of a securities company said, “The large companies can survive by settling the bill as a loss, but the small & medium companies are likely to be bankrupted.”

Eun-Woo Lee Wan-Bae Lee libra@donga.com roryrery@donga.com