"Prosecution Service must launch compulsory investigations to uncover the reality of Yeongpoong's organized accounting fraud and obstruction of audits"

*This content was translated by AI.

Residents from the upper reaches of the Nakdong River, who reported Yeongpoong for suspected underestimation and omission of environmental remediation costs at Seokpo Smelter on charges of violating the Capital Markets Act and the External Audit Act, appeared before the Prosecution Service to undergo investigation as complainants. They pointed out that financial authorities had imposed the largest-ever fine on Yeongpoong for violations of accounting standards and argued that the Prosecution Service must initiate compulsory investigations, including searches and seizures, to uncover the reality of Yeongpoong's organized accounting fraud and obstruction of audits.

The Committee for Residents Affected by Environmental Damage in the Upper Reaches of the Nakdong River and the Bonghwa County Committee for Seokpo Smelter released a statement on the 1st, announcing that Representative Shin Ki-seon appeared at the Seoul Central District Prosecutors' Office the previous day and underwent investigation as a complainant in the case filed against Yeongpoong and Executive Advisor Jang.

The committee previously reported Yeongpoong and Executive Advisor Jang, among others, after comparing the estimated future soil remediation costs for Seokpo Smelter publicly disclosed by the Ministry of Environment to the National Assembly in January with the provision for environmental liabilities reflected in Yeongpoong's 2024 semi-annual report, confirming a discrepancy of approximately 95.6 billion won.

Furthermore, the committee estimated that while Yeongpoong reported a semi-annual net profit of about 25.3 billion won in its public disclosures, reflecting the estimated 100 billion won in underreported environmental remediation costs would result in losses exceeding 70 billion won. The committee argued that this constitutes a "material fact" under the Capital Markets Act, as it involves a company that actually incurred losses disguising itself as a profitable one by understating remediation costs, which could influence investors' judgments.

The committee also emphasized that the authorities' actions serve as evidence of the seriousness of this matter. The committee stated, "The Financial Services Commission (FSC), after undergoing formal audits, determined that Yeongpoong concealed reliable source materials such as existing detailed investigation results and remediation plans from auditors, thereby underestimating and omitting future expected costs totaling 847.4 billion won over four years from 2021 to 2024. This was confirmed not as a mere estimation error but as intentional misconduct."

The committee also raised concerns regarding the compliance rate of Yeongpoong's soil remediation order at Seokpo Smelter. According to the committee, although Yeongpoong received a soil contamination remediation order from Bonghwa County in 2021, it had only remediated 16.0% of Plant 1 and 4.4% of Plant 2 by area as of June last year, which was the compliance deadline. The committee criticized that such acts of underestimating and concealing future remediation costs demonstrate Yeongpoong's intent to evade responsibility for environmental pollution restoration, with residents in the Nakdong River basin bearing the consequences.

The committee also demanded clarification of Executive Advisor Jang's responsibility. Although Executive Advisor Jang stepped down as CEO of Yeongpoong in 2015, he remains the same individual designated by the Fair Trade Commission for the corporate group Yeongpoong. Therefore, the committee maintains that investigations must reveal the extent to which Executive Advisor Jang has influenced major decision-making at Yeongpoong and Seokpo Smelter.

Separately, the Seoul National Police Agency Investigation Deliberation Committee (Investigation Review Board) ordered a re-investigation into Executive Advisor Jang's alleged violations of the Environmental Crime Control Act and the Soil Environment Conservation Act last month regarding suspicions of heavy metal contamination in the Nakdong River at Seokpo Smelter. The case is reported to have been transferred from the Seoul Gangnam Police Station, which handled the original investigation, to the Seoul National Police Agency's Major Crimes Investigation Team.

The committee demanded that "the Prosecution Service must immediately launch compulsory investigations, including searches and seizures, to uncover the reality of Yeongpoong's organized accounting fraud and obstruction of audits" and further stated, "It must clearly determine the responsibility of Jang Hyung-jin, designated as the actual controller of Yeongpoong and the same individual within the corporate group."

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*This content was translated by AI.