Roger Dassen, vice chairman of the world’s largest accounting and consulting firm Deloitte Touche Tohmatsu Limited, based in the U.S., met South Korean prosecutors last week to plead on behalf of the Korean branch Deloitte Anjin LLC suspected of conspiring with the accounting fraud of Daewoo Shipbuilding & Marine Engineering Co. (DSME).

According to sources, Dassen told prosecutors that company was taking the matter gravely and promised to strengthen auditing practices.

It is very unusual for the chief risk officer overseeing management at 150 global outlets to fly out to meet prosecutors on behalf of a troubled local partner.

The Seoul Central District Prosecutors’ Office arrested former employee of Deloitte Anjin with surname Bae for oversight in supervising accounting books of DSME and conspiring with the shipbuilder to cook up the ledgers to hide massive amounts of losses. It was the first case where a large accounting firm’s manager to be arrested for poor auditing and collusion in accounting scheme.

The prosecutors indicted Bae on Tuesday on concluding that he and his team had talked DSME’s management out of conducting a so-called ‘big bath’ accounting to correct the mishaps in its books after its president and CEO Jung Sung-leep’s took office in May 2015 and encouraged to continue with window-dressing. Big bath accounting refers to an auditing scheme that reflects losses at once to clean up the income statement for the following year. An unnamed source from the prosecution said the Bae’s team had feared the Korean financial authorities could place them accountable for poor auditing if major losses were reflected all at once.

The prosecution will continue to probe to find out whether Deloitte Anjin, the company itself was involved in the accounting fraud. The firm denied organizational involvement in the crime and contested to prove it at court.

By Lee Hyun-jung and Park Jong-hoon

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