[THE INVESTOR] A former CEO of Daewoo Shipbuilding & Marine Engineering was summoned July 4 as prosecutors widened their probe into the ailing shipbuilder’s alleged accounting fraud and poor management.

Ko Jae-ho, who headed the shipyard from 2012 to 2015, appeared before the Seoul Central District Prosecutors’ Office in southern Seoul as a key suspect in the ongoing investigation into the embattled shipbuilder.

“I feel deeply responsible for the grim situation faced by the company,” he told reporters before entering the prosecutors’ office. He, however, denied allegations that he ordered his subordinates to manipulate figures.

The 60-year-old is suspected of committing accounting fraud worth some 5.4 trillion won (US$4.6 billion) from 2012 to 2014 by underreporting the production cost or exaggerating profits.

Earlier this year, the shipyard said it swung to huge losses in 2013 and 2014 from earlier reported profits, citing accounting mishaps.

Prosecutors said they are investigating the motive and exact size of the fraud, adding he could have committed the crime to be reappointed as the company’s chief.

The summons came a week after his predecessor Nam Sang-tae, who headed the company from 2006 to 2012, was summoned for similar allegations.

In June, the country’s state auditor said the shipyard is suspected of cooking the books to hide up to 1.5 trillion won in losses between 2013 and 2014.

The outcome of the probe by the Board of Audit and Inspection was based on an analysis of orders for 40 offshore plants won by the South Korean shipbuilder over the cited period.

Prosecutors are currently looking into some 500 orders clinched by Daewoo since 2006 and are known to have detected additional problems.

The company, along with two other major shipbuilders here, are currently undergoing self-created debt-restructuring plans in the face of a decrease in new orders caused by the protracted global economic slump.

(theinvestor@heraldcorp.com)