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Prosecutors Raid LG Headquarters over Suspected Washing Machine Vandalism
Added Insult to Injury
Prosecutors Raid LG Headquarters over Suspected Washing Machine Vandalism
  • By matthew
  • December 29, 2014, 05:48
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LG Twin Towers, the international headquarters of LG, located in Seoul, South Korea.
LG Twin Towers, the international headquarters of LG, located in Seoul, South Korea.


Prosecutors searched the Yeouido, Seoul office of LG Electronics and its factory at Changwon, South Gyeongsang Province on Dec. 26.

Seoul Central District Prosecutor’s Office is currently investigating the incident of Samsung Electronics washing machine vandalism during the IFA 2014, which was held in Germany in September. Prosecutors reportedly searched the offices of Cho Sung-jin, CEO of the Home Appliance & Air Solutions Unit of LG Electronics and others, and seized related documents and computer hard disks.

The incident has developed into a suspicion of the fabricated evidence between Samsung and LG Electronics and a war of counter-accusations. Earlier, LG Electronics counter-sued employees of Samsung Electronics, claiming the evidence being fabricated.

As Cho failed to respond to multiple requests to attend investigations, prosecutors requested an arrest warrant. However, the court dismissed it. Cho is currently banned from leaving the country.

LG Electronics explained that Cho couldn’t be there since he was busy with year-end personnel management, participating in strategy meetings and preparing for the consumer electronics show (CES) early next month.

The company said on Dec. 26, “LG Electronics, which is a global company, was raided due to a rival’s unilateral and unreasonable claims, and we are concerned that this would significantly undermine our corporate activities and foreign credibility.”

Amid such a struggle with the allegations of vandalizing Samsung Electronics’ washing machines, LG Electronics’ business environment in 2015 is expected to get even worse.

Eugene Investment and Securities Co. said on Dec. 28 that the company’s sales for the first quarter will up 0.2 percent to 14.31 trillion won (US$13.02 billion) and its operating profit will down 10.2 percent to 452.6 billion won (US$411.75 million).

The company’s new model of smartphone, the G Flex 2, will be released. However, it will not affect profits much, since it is not a mass-produced product. Also, the company will not have specific events until the launch of G4, which is expected to be in the second quarter next year.

Profits of the company’s cash cows, household appliances, and TV sectors reached a high point in the first half of 2014. However, the profit rate has been declining since then, due to intensifying competition in the market and the weak currencies in the E.U. and emerging countries, even though prices of raw materials are extremely low. Therefore, profits of the Mobile Communications Division in 2015 are expecting a slight decrease.

Kwon Hyuk-jin, researcher of Eugene Investment and Securities, said, “As the competition between rivals, Apple and Samsung Electronics, is heating up, and Chinese smartphone manufacturers are achieving good results in the markets at home and Latin America, its business environment next year will be worse.”