Korean Firm Admits Fraud on Steel Prices
A major Korean trading company and its U.S. subsidiary pleaded guilty in Los Angeles federal court Thursday to charges of fraudulently inflating the price of steel products imported to the United States.
The products sold by the Korean firm to U.S. companies--primarily heavy pipe and steel wire for industry and construction--were actually sold below the minimum prices set up to protect the American steel industry.
Senior U.S. District Judge Jesse W. Curtis imposed a fine of $100,000 on the Daewoo Industrial Co. of Seoul and fined the firm’s U.S. subsidiary, Daewoo International, an additional $105,000.
U.S. Customs officials had estimated that the Korean company imported millions of dollars in steel products into the United States. Assistant U.S. Atty. Terree A. Bowers said Daewoo and its U.S. subsidiary, with offices in Los Angeles, Houston and San Francisco, both pleaded guilty to conspiring to file false statements with the U.S. Customs Service.
As part of the conspiracy, Bowers said, the U.S. subsidiary created falsely inflated invoices to its U.S. customers coinciding with inflated prices reported to Customs, actually selling its products at prices below the level set as the fair market value for foreign steel.
The corporations were attempting to avoid being investigated for possibly “dumping” Korean steel on the U.S. market, Bowers continued.
In the original federal indictment against Daewoo last March in Portland, before the case was transferred to Los Angeles, nine officials of the Korean firm and its U.S. branch were charged with violations of U.S. Customs laws.
Charges were dropped against all of the employees with the exception of the president of Daewoo Industrial, Kyung Hoon Lee of Seoul, as part of a plea-bargain agreement, however. Lee pleaded guilty to conspiring to impede the functions of the Customs Service and was fined $10,000.
While Lee could have received a possible prison term of five years, U.S. Atty. Robert C. Bonner called the sentences imposed by Curtis a “significant” result for the government. Noting that the fines were the maximum possible, Bonner said the case should serve as a warning to other foreign steel importers.
