By Park Si-soo
The Securities and Futures Commission said Wednesday that it had recommended the dismissal of Hyosung Corp. Chairman Cho Suck-rai and Vice Chairman Lee Sang-woon due to fraudulent accounting.
In addition, the maker of textiles and heavy machinery was ordered to pay a fine of 2 billion won ($1.9 million).
According to the commission, Hyosung is suspected of inflating its assets after failing to offload distressed affiliates in a series of acquisitions in 1998.
The conglomerate has reported inventory and tangible assets as 1.35 trillion won since 2005.
The chairman's second son Hyun-moon, recently asked the Seoul Prosecutors' Office to investigate his two brothers, who have a controlling stake in the group's two affiliates, for alleged embezzlement and breach of trust.
Prosecutors said that they will soon determine whether to issue subpoenas to question key figures, including the two brothers.
The two brothers embroiled in the scandal are Cho Hyun-joon, the chairman's first son and incumbent president of Hyosung, and Cho Hyun-sang, the third son and incumbent vice president of the group.
The second son claimed that "careless management" of his two brothers led to financial losses worth 10 billion won from the two affiliates.
He went on to say that the two firms had committed a variety of illegal activities, including embezzlement and breach of trust, to maximize their interests.
Hyosung denied the two executives had been involved in any wrongdoing. "Everything has been done legally. We will clarify all suspicions against them in the upcoming questioning," said a Hyosung spokesman.
The move is widely regarded as retaliation by the second son intended to stigmatize his two brothers as criminals in order to remove them from a three-way race for the company's throne.
The second son unloaded his entire stake in Hyosung in January, reflecting his deepening discord with family members over a power transition.
The group's incumbent chairman and father of the three turned 79 with his health condition said to be deteriorating continuously. Worse, he's currently on trial on suspicion of accounts fraud and tax evasion.
The scandal comes just a week after the first son became Hyosung's biggest shareholder with 10.33 percent by taking in 3,500 shares on July 1, making his father the second biggest shareholder with 10.32 percent and widening the gap in share ownership with the third son at 10.05 percent.
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| Cho Suck-rai |
In addition, the maker of textiles and heavy machinery was ordered to pay a fine of 2 billion won ($1.9 million).
According to the commission, Hyosung is suspected of inflating its assets after failing to offload distressed affiliates in a series of acquisitions in 1998.
The conglomerate has reported inventory and tangible assets as 1.35 trillion won since 2005.
The chairman's second son Hyun-moon, recently asked the Seoul Prosecutors' Office to investigate his two brothers, who have a controlling stake in the group's two affiliates, for alleged embezzlement and breach of trust.
Prosecutors said that they will soon determine whether to issue subpoenas to question key figures, including the two brothers.
The two brothers embroiled in the scandal are Cho Hyun-joon, the chairman's first son and incumbent president of Hyosung, and Cho Hyun-sang, the third son and incumbent vice president of the group.
The second son claimed that "careless management" of his two brothers led to financial losses worth 10 billion won from the two affiliates.
He went on to say that the two firms had committed a variety of illegal activities, including embezzlement and breach of trust, to maximize their interests.
Hyosung denied the two executives had been involved in any wrongdoing. "Everything has been done legally. We will clarify all suspicions against them in the upcoming questioning," said a Hyosung spokesman.
The move is widely regarded as retaliation by the second son intended to stigmatize his two brothers as criminals in order to remove them from a three-way race for the company's throne.
The second son unloaded his entire stake in Hyosung in January, reflecting his deepening discord with family members over a power transition.
The group's incumbent chairman and father of the three turned 79 with his health condition said to be deteriorating continuously. Worse, he's currently on trial on suspicion of accounts fraud and tax evasion.
The scandal comes just a week after the first son became Hyosung's biggest shareholder with 10.33 percent by taking in 3,500 shares on July 1, making his father the second biggest shareholder with 10.32 percent and widening the gap in share ownership with the third son at 10.05 percent.
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