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Last Updated:  Tuesday, 11 March, 2003, 05:58 GMT
Firm admits $1.2bn accounts error
A probe into one of South Korea's top five business groups has uncovered $1.2bn (750m) in accounting irregularities.

SK Global, part of the SK Group empire, hid 1.18 trillion won of bank obligations, and understated its net loss by 122.6bn won, said prosecutors, indicting boss Chey Tae-won and nine other executives.

Prosecutors' findings, based on 2001 accounts, were confirmed by SK Global, whose shares plunged by 15% after the prosecutors' report was released.

"We are notifying [investors] that the discovery of 1.5 trillion won in accounting irregularities by prosecutors is true," the firm said.

Boss arrested

The report comes as South Korea's new president, Roh Moo-hyun, attempts to curb the power of huge family-run business conglomerates, chaebol, whose debt mountain was blamed for the country's economic crisis in 1997-98.

And it also revealed that Chey, head of the SK Corp oil refining unit, made 71.6bn won in profit from inter-group share dealing, at prices above what the market was quoting.

Chey, who was arrested last month on charges of illegal stock dealing, used the transactions to tighten power on SK divisions, prosecutors said.

The chairman of SK Group, Son Kil-seung, was also summoned last week for questioning over suspicious stock deals.

'Incurable cancer'

Senior prosecutor Lee In-Kyu said: "It can no longer be tolerated that the country's top businesses suffer from an incurable cancer in corporate governance and transparency.

"I hope this will help SK Group and other conglomerates to become more trustworthy businesses by improving their accounting practices and corporate transparency."

But Lee added that there were no plans to probe other business groups, despite widespread concerns over the operations of chaebol.

"We are not planning to investigate other chaebol including Samsung at the moment."




WATCH AND LISTEN
Hank Morris, Industrial Research Consultants, Seoul
"The books were obviously fudged to an enormous degree..."



SEE ALSO:
Korea in 'chaebol' crackdown
04 Mar 03 |  Business
Tests ahead for S Korean leader
25 Feb 03 |  Business


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