Residents of Bonghwa County, North Gyeongsang Province, were questioned by prosecutors as complainants in a case accusing Young Poong(000670) of violating the Financial Investment Services and Capital Markets Act and the Act on External Audit of Stock Companies. The residents of Bonghwa County had filed a complaint with prosecutors in January, saying Young Poong recorded the expense needed for soil remediation lower than the actual amount.
According to legal sources on the 2nd, the Seoul Central District Prosecutors' Office questioned Shin Gi-seon, head of the Countermeasure Committee for Residents Affected by Environmental Damage in the Upper Nakdong River, as the complainant on Jan. 31.
The committee said the Bonghwa County head ordered soil decontamination for the Young Poong Seokpo Smelter in 2021, but the company recorded the expected remediation expense lower than the actual amount and reflected it as a provision liability on its financial statements.
In connection with this, the committee submitted a complaint to prosecutors on Jan. 22. At the time, the complaint said Young Poong wrote 203.5 billion won in its disclosure, unlike the 299.1 billion won remediation expense it reported to the National Assembly, understating it by 100 billion won.
The committee said, "This is a serious illegal act that deceived the market and investors," adding, "The net profit for the first half of 2024 is about 25.3 billion won, but if the reduced environmental remediation expense of about 100 billion won is properly reflected, it would instead result in a loss of more than 70 billion won."
The Financial Services Commission also imposed a penalty surcharge of 20.4741 billion won in July, saying Young Poong violated accounting standards. It said the company failed to properly reflect the remediation expense in its books and calculated the expense based on a remediation method not permitted by law, thereby disclosing a liability smaller than the actual amount.
Shin said, "We must uncover the substance of Young Poong's organized accounting fraud and audit obstruction," and argued, "We must clearly determine where responsibility lies for Chair Jang Hyung-jin, designated as the same-person head of the business group as the company's de facto controller."