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Regulator regrets confusion over suspected accounting breaches at Samsung BioLogics

All Headlines 17:47 May 16, 2018

SEOUL, May 16 (Yonhap) -- The head of the nation's top financial regulator on Wednesday expressed regret for market confusion caused by a prior notice from financial authorities that Samsung Biologics Co. allegedly breached accounting rules.

Choi Jong-ku, chairman of the Financial Services Commission (FSC), told lawmakers that he "takes responsibility" for causing market confusion, but said the prior notice was a necessary step for better investor protection.

Shares of Samsung BioLogics have fallen since financial authorities notified the company of an accounting violation earlier this month. Samsung Biologics has strongly denied it breached accounting rules.

Financial authorities will hold a meeting on Thursday to review a regulatory probe into accounting rules at Samsung Biologics.

Choi emphasized that the review will be conducted in a transparent and fair manner.

Although financial authorities have not disclosed details of the probe into Samsung BioLogics, some politicians and civic activists have raised questions about the biosimilar maker's sudden profit in 2015.

Samsung Biologics corporate logo (Yonhap)

Founded in 2011 as a new growth engine of Samsung Group, Samsung BioLogics posted losses until 2014.

In 2015, however, the company posted a net profit of 1.9 trillion won (US$1.7 billion) after it changed a method that calculates the value of its affiliate, Samsung Bioepis.

Samsung BioLogics has claimed that the change was in line with international accounting standards.

Samsung Electronics and Cheil Industries Inc. each own 40 percent stakes in Samsung BioLogics.

People's Solidarity for Participatory Democracy, an influential civic group, has argued that Samsung BioLogics may have inflated its profit to raise the value of the company to benefit Samsung Group's heir apparent Lee Jae-yong, who held a major stake in Cheil Industries at that time.

The civic group has said the suspected accounting breaches at Samsung BioLogics may have helped the controversial takeover of Samsung C&T Corp. by Cheil Industries Inc. in 2015.

The merger of two Samsung units was widely seen as a step to enhance Lee's control of Samsung Group as his father Lee Kun-hee suffered a heart attack in 2014 and has been hospitalized ever since.


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