Case 38: Daewoo Group (South Korea, 1999)

• Prof. Dr. Klaus Henselmann
• Dr. Stefan Hofmann

At the end of 1999, the Daewoo Group, one of the largest conglomerates in the world, collapsed in a spectacular fashion. The accounting fraud that was uncovered was described as one of the biggest accounting frauds in history. It predated Enron, WorldCom, Tyco, Parmalat and the other corporate scandals that more recently devastated confidence in U.S. and European markets. Thus, the tale of Daewoo could have served as one of the early warning signs of the massive corporate governance failures that later plagued many leading companies around the world. However, Daewoo’s warnings signs were dismissed as an aberration limited to a distant country called South Korea that had fallen victim to the 1997 Asian financial crisis.

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