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Doosan Enerbility under probe for allegedly cooking books

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By Park Jae-hyuk
  • Published KST
  • Updated KST
Samjong KPMG may also face penalty depending on regulator’s conclusions

Doosan Enerbility CEO Park Gee-won

Doosan Enerbility is under investigation by financial authorities over an allegation that the company had intentionally delayed reflecting losses in its balance sheet to exaggerate earnings, the Financial Services Commission (FSC) said Tuesday.

If the financial regulator rules against the plant constructor, a heavy fine could also be imposed on Samjong KPMG, which has issued qualified opinions on Doosan Enerbility’s audit reports.

The probe on Doosan Enerbility began three years ago as some politicians claimed that the company had tried to conceal a nearly 300 billion won ($222 million) loss from a $2.3 billion project to build two thermal power plants in India. The order was placed in 2016 with the firm’s foreign subsidiary, Doosan Power Systems India (DPSI).

DPSI posted net losses of 31.9 billion won in 2017, 29.1 billion won in 2018 and 44.4 billion won in 2019. However, its net loss abruptly soared to 331.4 billion won in 2020.

The Financial Supervisory Service (FSS) claimed that Doosan Enerbility had to reflect losses from rising costs in its balance sheets between 2017 and 2019 but didn't. Last month, the FSS finished its investigation and sent the case to the supervisory committee under the FSC, after giving the company a prior notice on heavy punishment.

In response, Doosan Enerbility refuted the financial watchdog’s claim, saying that it had reflected costs after finishing talks with the client. The company also said the client will compensate the loss, once the construction is completed.

"Our audit reports received qualified opinions from a credible auditor overseas," Doosan Enerbility said in a statement. "We disagree with the FSS, so we will prove our innocence by convincing the supervisory committee members."

Samjong KPMG also denied any irregularity regarding this issue.

Once the supervisory committee concludes, the case will be sent to the Securities and Futures Commission under the FSC. The FSC commissioners will make the final decision on penalties.

The supervisory committee reportedly reviewed the case twice. It is said to be planning to have another meeting with officials of the FSS and Doosan Enerbility later this month, with the aim of making a conclusion by next month.

“The supervisory committee is reviewing the case, so nothing has been decided regarding disciplinary measures,” the FSC said in a press release.