Daewoo Group's collapse in the Asian financial crisis

Daewoo grew from a five-employee textile trader founded in 1967 into a sprawling conglomerate with 300 overseas subsidiaries and roughly $100 billion in annual sales, built on aggressive expansion funded by heavy borrowing. When the Asian financial crisis hit in 1997, sales at its overseas auto and electronics units fell well short of the volumes needed to service that debt, and none of its foreign operations were turning a profit. Rather than scale back, the group's leadership concealed the shortfall through accounting fraud later estimated at 22.9 trillion won (about $15.3 billion) — at the time described as the largest accounting fraud on record, larger than either Enron's or WorldCom's. Creditors forced a government-mandated breakup in August 1999, and the group filed for bankruptcy that November with debts estimated between $50 billion and $80 billion. Founder Kim Woo-choong fled abroad for six years before returning to face charges in 2005, and was sentenced to eight and a half years in prison.