Main shareholder of Daewoo Mangalia Heavy Industries raided

South Korean prosecutors have raided the offices of Daewoo Shipbuilding & Marine Engineering Co. (DSME), majority shareholder of Daewoo-Mangalia Heavy Industries, following a request by an internal audit committee. The investigation is directed at two of the company’s former CEOs, currently under mismanagement allegations, and comes amid attempts by the company to reduce debts through assets sales.

According to Bloomberg, South Korean prosecutors raided the company’s headquarters in Seoul and offices at the Okpo shipyard in Geoje Island, seizing documents, account books and hard drives. The company’s former CEOs Nam Sang-Tae, who led DSME between 2006 and 2012 and Ko Jae-Ho, who succeeded him before stepping down last year, have been placed under travel bans.

Last year the world’s second-largest shipbuilder posted net loss of 3.19 trillion won (USD 2.8 billion), six times greater than in 2014. The troubled shipbuilder is facing allegations that it manipulated its 2013 and 2014 profit reports, to make the company appear financially healthier. According to auditors, DSME allegedly hid a USD 2 billion loss, which it belatedly added to its 2015 statement.

Daewoo Shipbuilding & Marine Engineering Co. is a majority shareholder of Daewoo-Mangalia Heavy Industries, a joint venture started in 1997 between the Korean shipbuilder and the 2 Mai Mangalia Shipyard. The company’s restructuring plans include the sale of a part of its overseas assets, including the Mangalia-based shipyard.

Last month, Romanian tax authority ANAF placed Daewoo Mangalia Heavy Industries on the list of debtor companies, a decision the company contested. In a press release, Daewoo Mangalia Heavy Industries said their debts, amounting to RON 43.64 million at the end of April, were covered by the RON 144.01 million in VAT refunds the Romanian state had failed to return.

Daewoo Shipbuilding’s shipyard at the Black Sea was established with a social capital of USD 103.92 million, with USD 53 million (51 percent share) brought in by the Korean shipbuilder and USD 50.92 million (49 percent share) by the Romanian partner.

Georgeta Gheorghe