The Daewoo dissolution and corruption scandal was a 1999-2006 scandal in
South Korea
South Korea, officially the Republic of Korea (ROK), is a country in East Asia, constituting the southern part of the Korea, Korean Peninsula and sharing a Korean Demilitarized Zone, land border with North Korea. Its western border is formed ...
involving the bankruptcy of
Daewoo
Daewoo ( ; Hangul: , Hanja: , ; literally "great universe" and a portmanteau of "dae" meaning great, and the given name of founder and chairman Kim Woo-choong) also known as the Daewoo Group, was a major South Korean chaebol (type of conglomera ...
, then-country's second largest company, and a subsequent corruption investigation, involving arrests, escapes and eventual conviction of dozens of company's top executives. The resulting scandal has been described as one of the biggest scandals in South Korea.
Background
Daewoo
Daewoo ( ; Hangul: , Hanja: , ; literally "great universe" and a portmanteau of "dae" meaning great, and the given name of founder and chairman Kim Woo-choong) also known as the Daewoo Group, was a major South Korean chaebol (type of conglomera ...
was a major South Korean conglomerate. Prior to the
Asian financial crisis
The Asian financial crisis was a period of financial crisis that gripped much of East Asia and Southeast Asia beginning in July 1997 and raised fears of a worldwide economic meltdown due to financial contagion. However, the recovery in 1998– ...
, Daewoo was the second largest conglomerate in Korea. By 1999, Daewoo went bankrupt, with debts of about US$50
-80 billion.
Corruption scandal
Soon after the demise, South Korean prosecutors filed charges against over 40 top executives, in what BBC described as the Daewoo corruption scandal. This was related to the discovery that company's auditors concealed the amount of debt, and that bribes of about 470 billion won were involved (close to US$400 million). Loss from bribery and corruption has been estimated to over US$1 billion.
Daewoo Chairman
Kim Woo-choong fled to Vietnam, and former Daewoo factory workers put up
"Wanted" posters with his picture. Kim returned to Korea in June 2005 and was promptly arrested. He was charged with masterminding accounting fraud of 41 trillion won (US$43.4 billion), illegally borrowing 9.8 trillion w