Posted on 30 Jun 2015
G Steel insisted that an accounting discrepancy which last week drew a lawsuit from the Securities and Exchange Commission was a result of time-consuming negotiation with scrap suppliers.
In a statement released today, Ryuzo
Ogino, chief executive officer of G Steel Group, insisted that the company had
no intention in making false entries.
"G Steel Group, its directors and management have determined to conduct
business with good corporate governance and strictly compliance with the law.
The accounting discrepancy was a result of the extended negotiation with
suppliers... This transaction did not cause any damage to shareholders. The
negotiation was undertaken for the best benefits of the company, which
ultimately resulted in the best benefits of shareholders," he said.
On June 24, the SEC SEC filed a criminal complaint with the Department of
Special Investigation (DSI) against four directors and executives of G Steel
(GSTEL) and G J Steel (GJS) for falsifing the companies’ accounts. They were
charged of making false entries concerning the purchase of raw materials from
overseas suppliers materially lower than the actual value to deceive any
persons about financial condition and performance of the companies.
The four persons are (1) Somsak Leeswadtrakul, GSTEL director and executive
& GJS director, (2) Kannikar Soykeeree, GSTEL executive, (3) Nakun Sakunchotikarote,
GSTEL executive and (4) Chanathip Trivuth, GJS director and executive.
The SEC said that in early 2008, both companies made advance purchase orders of
a large amount of steel from overseas suppliers at a market price at that time.
Later, steel price dropped sharply. As raw material price was high while final
product price was low, both realised huge losses. To avoid realisation of such
losses, the four persons were alleged of ordering, permitting or facilitating
the recording of overseas trade accounts payables below the actual amount
during 2008 and 2009.
Ogino said that with annual capacity of 3.3 million tonnes of hot-rolled steel
coil products, the group required 200,000-300,000 tonnes of scraps for the
production. He added that in 2008, steel prices fell sharply while the scraps
were bought at a higher price. This forced the group to launch a negotiation
with its suppliers. The payables were booked below the actual amount to reflect
the ongoing negotiation at the time. The suppliers in 2010 agreed to reduce the
scraps price and extend the payment period.
"There was no intention to falsify the accounting record to mislead the
public... In 2010, as the agreement was reached, we voluntarily restated our
financial statement to reflect the actual information," Ogino said.
The SEC charged the four persons of violating Sections 312 and 315 of the
Securities and Exchange Act BE 2535 (1992) in conjunction with Sections 83 and
86 of the Penal Code. It also said the persons facing criminal complaints are
deemed untrustworthy and they are not qualified to maintain the directorship
and executive positions of listed companies.
