Kim Woo-choong, the former chairman of collapsed electronics conglomerate Daewoo, appeared in a Seoul court Tuesday and reportedly said that he would take responsibility for a nearly $40 billion accounting fraud.
Kim fled South Korea in 1999 and returned earlier this summer to be indicted on charges of orchestrating a $39 billion accounting fraud, another $9.7 billion in illegal financing, and diverting $23 billion out of the country. Prosecutors say that he inflated the assets of four Daewoo subsidiaries and borrowed illegally using doctored accounting books and fake letters of credit.
According to reports from a South Korean news agency, Kim told the court that he would take full responsibility for the accounting fraud charges. In the late 1990s, it was not unusual for large companies operating in the country to doctor their books and obtain bank loans. He had started at the company as a textile salesman, eventually building it into one of the country's largest conglomerates.
Kim, 69, faces life in prison, though it is unlikely he would serve a full sentence due to his age and a public expression of regret he made upon his return to the country. In July, his reportedly life-threatening heart condition led to a hospital stay and temporary suspension of the case.
Last week, Daewoo named a new chief executive at its shareholders' meeting. The company has been in a debt workout program since early 2000, after collapsing under nearly $80 billion in debt the previous year. The 1997 Asian financial crisis was also a major factor in the company's collapse, leading the South Korean government to accept $58 billion from the International Monetary Fund. Parts of Daewoo were broken up and sold, with General Motors Corp. acquiring a majority stake in Daewoo Motor to create GM Daewoo in 2002.
Lee Seung-chang was promoted from a directorship, and has been at the company for nearly 30 years. In a statement released by Daewoo, Lee said that he would prioritize raising the company's value and strengthening market activity.
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