Do not go gentle into that good night, old age should burn and rave at close of day; Rage, rage against the dying of the light, though wise men at their end know dark is right, because their words had forked no lightning they, do not go gentle into that good night.
KAI may face penalties for book rigging
By Jhoo Dong-chan
Korea Aerospace Industries (KAI) is expected to face punitive measures soon as the financial regulator will start reviewing book rigging cases involving the company today, the Financial Services Commission (FSC) said, Tuesday.
The deliberation came after the Financial Supervisory Service (FSS) investigated the companies for suspected accounting fraud and decided to levy a large amount of fines.
The FSC said it will hold a deliberation committee meeting today to discuss the matter.
Industry sources said the FSS already notified the firm about heavy penalties, including hefty fines and placing an external auditor, but an FSS official neither confirmed nor denied it.
“I understand discussion about the matter is still underway,” the FSS official said. “We will announce punitive measures for KAI after the FSC's decision.”
Korea Aerospace Industries CEO Kim Jo-won
By Jhoo Dong-chan
In October 2017, KAI was found to have fabricated its production costs and factory prices between 2013 and 2017. During the period, the nation's sole aerospace firm allegedly falsified its sales performance.
The Seoul Central District Prosecutors' Office said it inflated its sales to 535.8 billion won with a 46.5 billion won net profit for the five-year period. The Seoul Central District Court also issued an arrest warrant for former KAI head Ha Seong-yong on charges of accounting fraud, breach of trust and embezzlement.
KAI has persistently denied the prosecution's investigation result, claiming the firm had only used a different set of accounting standards.
It said the firm's accounting methods had been based on payment inflow and outflow with its clients and subcontractors between 2013 and 2017.
Since the prosecution started investigating the firm for accounting fraud in 2017, KAI changed its accounting methods based on business completion progress.
“The discussion is still underway, but it needs to be looked into intentionality,” said a major account firm partner accountant who asked not to be named.
“KAI, in fact, depreciated its five-year operating profits. Normally, firms appreciate their earnings when they cook their accounting books. It's not usual. So, the case needs to be studied further.”
KT&G case
Financial authorities are also expected to hold a deliberation committee meeting soon to discuss similar charges for KT&G.
The nation's largest tobacco maker has been suspected of engaging in double-entry bookkeeping in its acquisition of a 60 percent stake in Indonesia's sixth-largest tobacco maker Trisakti Purwosari Makmur in 2011.
Double-entry bookkeeping is the practice of recording transactions on both the debit and credit side of a statement. KT&G allegedly made two different books ― one for a tax report with the government and the other for the firm's accounting management.
Financial authorities said they have yet to find any irregularities regarding the charges. KT&G also said the matter is still being reviewed by the FSS, and it will announce its position after the agency announces its conclusion.