Individual investors will file a compensation lawsuit against Daewoo Shipbuilding and Marine Engineering (DSME) and Deloitte Anjin next month for allegedly committing accounting fraud

http://www.koreatimes.co.kr/www/news/biz/2015/08/488_185223.html

Updated : 2015-08-20 21:01

Retail investors to file lawsuit against DSME

By Kim Jae-won

Individual investors will file a compensation lawsuit against Daewoo Shipbuilding and Marine Engineering (DSME) and Deloitte Anjin next month for allegedly committing accounting fraud, a law firm said Thursday. Hannuri Law said it will sue the shipbuilder and the accounting firm in September on behalf of retail investors who are estimated to have lost a combined 2.2 trillion won ($1.9 billion) after DSME announced that it posted 3 trillion won of losses in the second quarter. Deloitte Anjin supervised the shipbuilder’s financial reports.
“Most of the losses came from its marine plant orders they have won since 2011. It means considerable portions of their sales and profits in the marine plant business were fabricated,” said the law firm in a statement.
Hannuri said DSME’s 2014 financial report seems to be written as part of an accounting fraud scheme. It said the company and Deloitte Anjin inflicted losses for investors as they bought shares of the shipbuilder based on the report. Market capitalization of DSME has dropped 2.2 trillion won since March when the report was posted.
According to the 2014 report, the number of DSME’s individual investors reached 86,391, owning 48.7 percent of the whole shares. DSME has run the marine plant business since 2011, and has posted that its operating profits marked more than 400 billion won every year since then.
Hannuri said individual investors who have bought shares of DSME between April 1 and July 14 can join the lawsuit. July 14 was the day when the shipbuilder’s hidden losses were known to the public.
The law firm said it expects the lawsuit will result in a crackdown on accounting fraud in the shipbuilding industry and help shareholders of the company get compensations for their losses.

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