Yoo-Pyeong fined 20.4 billion won for accounting violations

South Korea's financial authorities have imposed significant fines on Yoo-Pyeong and KORAMCO for violating accounting standards. Yoo-Pyeong faces a penalty of 20.47 billion won (approximately $14.7 million USD), while KORAMCO is fined 8.43 billion won (approximately $6 million USD).

Yoo-Pyeong had argued that its accounting for provisions related to environmental cleanup costs at its Seocheon smelter involved "estimation," a subjective area. However, the Financial Services Commission determined that the company failed to recognize or understated the costs for purifying contaminated soil and groundwater from 2021 to 2024. This underestimation would have reduced reported expenses, thereby inflating profits.

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There can be various opinions in the application and interpretation of accounting standards for provisions.

The company had previously been fined by the Ministry of Environment for leaking heavy metal cadmium into the Nakdong River. While it had set aside provisions for environmental cleanup, the scale of these provisions was allegedly reduced in financial statements. Furthermore, Yoo-Pyeong is accused of understating impairment losses during asset impairment assessments in 2023 by excluding the impact of operational suspensions.

In addition to the corporate fines, Yoo-Pyeong's former CEO and four other executives received penalties totaling 1.51 billion won, and its auditor, Daejoo Accounting Corp., was fined 1.07 billion won. KORAMCO's CEO and two others were fined 763 million won. The financial authorities cited intentional violations of accounting standards, leading to measures such as recommending the dismissal of Yoo-Pyeong's former CEO.

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Due to repeated underestimations, an unusually large fine has been imposed.