A member of South Korea’s Parliament has called on state-owned policy bank Korea Development Bank (KDB) to take responsibility for Daewoo Shipbuilding & Marine Engineering’s (DSME’s) predicament.
DSME, South Korea’s third-biggest shipbuilder, is in financial turmoil after it was discovered that as much as KRW3 trillion (USD2.5 billion) in losses from delayed offshore plant projects was hidden from its balance sheet. The revelation has caused many analysts to predict that DSME’s loss in the second quarter of 2015 could top KRW1 trillion and worsen the shipbuilder’s debts, which already exceed KRW15 trillion.
Hong Moon-pyo, from the ruling Saenuri Party, said in a recent presentation that the government believes that damage to investors should be minimised.
Hong said, “The recent revelation that DSME concealed massive losses led to a plunge in its stock price and many citizens panicked.
“If KDB holds stocks in DSME and manages citizens’ pension funds, then it seems the bank has forgotten its dignity.
“As DSME’s main shareholder, KDB is responsible for minimising damage to investors and should work hard to normalise the shipbuilder’s operations.”
DSME’s stock plunged 30% when the hidden losses were revealed on 15 July.
Hong said that if KDB does not appear to take responsibility, party-level countermeasures will be arranged, meaning a parliamentary inspection of DSME’s accounts could take place. This could lead to the uncovering of other assets and the liabilities as DSME’s books are raked open.
KDB has said it is doing due diligence into DSME to determine how much additional funding it needs.