SK Global: 3.4 Trillion Won in Account Irregularities Overseas

Apart from the 1.5 trillion won in accounting fraud prosecutors found during investigations into SK Global, a court witness hinted that the trading firm could have some 3.4 trillion won of accounting irregularities at its eight overseas branches.

At a court hearing attended by 10 SK Group officials including Chairman of SK Corp. Chey Tae-won, and Moon Deok-gyu, senior director at SK Global, acknowledged there is accounting fraud involving overseas branches, when asked by the judge ˝whether the amount of accounting irregularities overseas reached 3.4 trillion won as stated by the accused during the investigation.˝

Moon`s acknowledgement of the statement is most likely to prove right, and the total amount of accounting irregularities could now reach as much as 4.9 trillion won.

When asked what the scope of liabilities and accounting irregularities at SK Global U.S. and Singapore branches as of the end of March 2003 was, Moon answered that ˝since liabilities include borrowings, loans and capital, the exact amount could not be assessed and written data would be submitted regarding the issue.˝

Prosecutors said that it seized internal reports and statements from officials involved in the case after conducting a search of the company.

˝Under international law, criminals are to be tried by the government of the country where they committed their crimes, so we will not be able to file additional charges for irregularities at overseas branches,˝ said an official at the prosecution. ˝We have added the 250 billion won SK Global invested in overseas operations to the existing 1.5 trillion won.˝

˝Although prosecutors referred to `accounting irregularities at SK Global` in its records,˝ pointed out an official at the court, ˝it is not clear whether they meant accounting fraud or manipulation of bookkeeping by accounting irregularities.˝

˝I cannot recall what I meant by the term exactly,˝ responded Chairman Chey during the hearing.

Tae-Hoon Lee jefflee@donga.com