Posted April. 21, 2005 23:18,
Korean Air publicised its past window dressing settlement. It was the first out of all the firms accused in a securities group lawsuit.
Following this, one wonders if other firms will announce the facts of their window dressing settlements, too.
Korean Air yesterday announced that out of its 88 billion won inventory property, 71.9 billion won was overrated on the 2003 end-of-year balance sheet.
Out of this, Korean Air treated 47.7 billion won as previous term error correction on last years business report and will include the remaining 24.2 billion won in this years first quarter (January to March) report.
Goods-in-transit is an asset ordered from abroad that has been paid for, but has not yet arrived and that is missing from the firms inventory as a result.
Since the introduction of the group lawsuit system, Korean Air was the first company to voluntarily correct itself by issuing a window dressing settlement.
According to the current regulations, if firms voluntarily announce prior violations of accounting over the next two years, the issue will not be pursued legally, and if the firm is already in the audit phase, the punishment level will be decreased.
Korean Air is being audited by the Financial Supervisory Service and will receive final disciplinary action from the Securities and Futures Commission on May 11.
As Korean Air publicly solved their accounting fraud, other firms are expected to confess as well.
The grace period of the lawsuit is until the end of next year. Thus, firms can only receive an indulgence if they confess in that period.
However, there will still be civic and constitutional responsibilities, and if the manipulation size is big, it is hard to solve it at once. Therefore, some expect that many companies dont participate.
A Federation of Korean Industries spokesperson said, If firms publicly announce past window dressing settlements, they will be excluded from group lawsuits. However, they will still receive punishment according to criminal law and securities trading law, and so we are looking at how the financial authorities treat the Korean Air case.