South Korea's FSC fines Geumyang 7.6 billion won over accounting violations
In short
South Korea's Financial Services Commission said it fined battery and metals company Geumyang 7.633 billion won for violating accounting standards, including false revenue recognition and obstruction of its external audit. The company's CEO and five other current and former executives were fined a combined 1.5219 billion won, and the company, its CEO and a former finance executive were referred to prosecutors. Geumyang, which received a delisting decision in May, has filed for an injunction to suspend that decision.
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South Korea's Financial Services Commission decided at its 17th meeting on Oct 7 to fine Geumyang 7.633 billion won for violating accounting standards in preparing and disclosing its financial statements, the commission said. The company's CEO, Ryu Kwang-ji, and five other current and former executives were fined a combined 1.5219 billion won, bringing total penalties to 9.1549 billion won, according to Maeil Business. Yonhap News reported the CEO's fine as 733.3 million won, while Seoul Economic Daily reported it as 763.3 million won. [ 1 , 2 , 3 , 4 ]
The commission said Geumyang booked about 10.3 billion won in false revenue and cost of sales in 2022 by receiving and issuing false tax invoices for goods it never transferred, and misstated the scope of its consolidated statements. It also said the company brought its Mongolian affiliate under consolidation even though it jointly controlled the entity with its second-largest shareholder under a shareholder agreement, overstating equity. Regulators said Geumyang failed to recognize impairment losses after signs of worsening results at the Mongolian entity, with unrecognized impairment put at 76.33 billion won in the separate statements and 74.17 billion won in the consolidated statements for 2023, according to Maeil Business. [ 1 , 2 , 3 , 4 ]
The FSC said Geumyang obstructed its external audit: it colluded with counterparties to present false transaction evidence, and during a 2022 audit it moved inventory to a warehouse company so the auditor would inspect it as company inventory, then retrieved it, Maeil Business and Seoul Economic Daily reported. In the supervisory review, the commission said, the company submitted falsely prepared receipts and stated falsely that it had not obstructed the auditor's inventory inspection. [ 2 , 3 , 4 ]
Alongside the fines, the commission ordered a three-year auditor designation, recommended the dismissal of the CEO and other executives and imposed a six-month suspension of duties, and referred the company, the CEO and the former finance executive to prosecutors, with the former sales executive and two others notified to prosecutors. Yonhap News and Maeil Business describe the personnel measures as covering the CEO and three others; Asia Economy says five of the six sanctioned people received dismissal recommendations, duty suspensions or equivalent measures. [ 1 , 2 , 3 , 4 ]
Geumyang's Mongolian investment was announced in May 2023, when the company said it would invest 60 million dollars for a 60% stake in Monlaa LLC and start lithium mining in 2024, projecting 2024 revenue of 402.4 billion won and operating profit of 161 billion won, Maeil Business reported. In September 2024 the company cut those projections to 6.58 billion won in revenue and 1.316 billion won in operating profit, citing delays, and excluded lithium from the forecast because the business was still at the exploration stage. The Korea Exchange later designated Geumyang as an unfaithful-disclosure company over its May 2023 business plan disclosure, Maeil Business reported. [ 4 ]
Geumyang received audit opinion disclaimers for two consecutive years, in 2024 and 2025, and the Korea Exchange decided to delist it on May 20 this year, according to Maeil Business; it also missed the deadline for this year's half-year report, Seoul Economic Daily reported. The company filed for an injunction at the Seoul Southern District Court the day after the delisting decision, suspending the clean-up trading and delisting process, and Seoul Economic Daily reported that observers see a low chance of the application being accepted. Geumyang is pursuing a physical split-off of its recovered-metals, nonferrous-products, environment and waste-battery recycling businesses into a company tentatively named KYDC, with the surviving company keeping secondary batteries, resource development and foaming agents; a shareholders' meeting for approval is set for Oct 19, Seoul Economic Daily reported. [ 3 , 4 ]
The commission also fined Asendio 733.7 million won and ordered a three-year auditor designation and an equivalent of a dismissal recommendation for a former finance executive over failures to recognize impairment on subsidiary investment shares. Taeyul Accounting Corp., which the FSC said neglected audit procedures for Asendio, was fined 80 million won with a 50% additional contribution to the joint compensation fund, and Seonjin Accounting Corp. was fined 22.5 million won with a 20% additional contribution for violating significant audit procedures. [ 1 , 2 ]
Why it matters
The case is one of the accounting enforcement actions the FSC announced at its 17th meeting, and it lands on a company already facing delisting. How the delisting and the planned split-off proceed will shape the outcome for shareholders of a former lithium-themed stock.
Key facts
- The Financial Services Commission decided at its 17th meeting on Oct 7 to fine Geumyang 7.633 billion won for violating accounting standards in preparing and disclosing financial statements. [ 1 , 2 , 3 , 4 ]
- CEO Ryu Kwang-ji and five other current and former executives were fined a combined 1.5219 billion won, bringing the total to 9.1549 billion won, according to Maeil Business. [ 2 , 3 , 4 ]
- The FSC also ordered a three-year auditor designation, recommended the dismissal of the CEO and other executives, and imposed a six-month suspension of duties. [ 1 , 2 , 3 , 4 ]
- Geumyang was found to have booked about 10.3 billion won in false revenue in 2022 using false tax invoices without transferring real inventory. [ 3 , 4 ]
- Regulators said Geumyang colluded with counterparties to present false transaction evidence and moved inventory to a warehouse company so auditors would count it as company inventory before retrieving it. [ 2 , 3 , 4 ]
- The company consolidated Mongolian entity Monlaa LLC despite joint control with its second-largest shareholder and failed to recognize impairment losses, according to the FSC. [ 1 , 2 , 3 , 4 ]
- Geumyang received a delisting decision from the Korea Exchange in May and filed for an injunction against it; trading and delisting procedures are suspended. [ 3 , 4 ]
- The FSC also fined Asendio 733.7 million won with a three-year auditor designation, and sanctioned auditors Taeyul and Seonjin accounting firms. [ 1 , 2 ]
Confirmed by several sources
- The Financial Services Commission fined Geumyang 7.633 billion won for accounting-standard violations at its 17th meeting on Oct 7, with a three-year auditor designation attached. [ 1 , 2 , 3 , 4 ]
- Six current and former Geumyang executives were fined a combined 1.5219 billion won. [ 2 , 3 , 4 ]
- Geumyang, its CEO and a former finance executive were referred to prosecutors; a former sales executive and two others were notified to prosecutors. [ 1 , 2 , 3 ]
- Geumyang recognized false revenue and cost of sales in 2022 through false tax invoices and misstated the scope of its consolidated statements. [ 1 , 2 , 3 , 4 ]
- The FSC found that Geumyang obstructed its external audit and submitted false receipts and statements during the supervisory review. [ 1 , 2 , 3 , 4 ]
- The FSC also sanctioned Asendio with a 733.7 million won fine and a three-year auditor designation, and fined Taeyul Accounting Corp. 80 million won and Seonjin Accounting Corp. 22.5 million won. [ 1 , 2 ]
Still unclear
- The fine imposed on CEO Ryu Kwang-ji is given as 733.3 million won by Yonhap News and as 763.3 million won by Seoul Economic Daily; the per-person figures reported by each outlet do not match exactly. Two outlets give different amounts for the same individual penalty, and neither figure appears in the other outlet's list.
- Outlets differ on how many executives received dismissal recommendations: Yonhap News and Maeil Business describe recommendations covering the CEO and three others, while Asia Economy says five of the six sanctioned people received dismissal recommendations, duty suspensions or equivalent measures. The documents disagree on the scope of the personnel measures.
- Seoul Economic Daily reports that observers see a low chance that Geumyang's injunction against the delisting decision will be accepted. This is a single-source characterisation of unnamed observers' expectations, not a decision or statement by a named party.
What local media are saying
Timeline, local time
- Yonhap News reports the FSC's decision to fine Geumyang 7.633 billion won and individual executives, with the detailed list of sanctions and violations. [ 1 ]
- Asia Economy reports the FSC decision, the combined executive fines and the Asendio and audit-firm measures. [ 2 ]
- Seoul Economic Daily reports the fine, names CEO Ryu Kwang-ji, adds the 10.3 billion won false-revenue figure and the delisting and split-off background. [ 3 ]
- Maeil Business reports total fines of 9.1549 billion won and details the Mongolian Monlaa investment and the unrecognized impairment losses. [ 4 ]