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Regulator to rule on suspected accounting breach of Samsung BioLogics without prejudice

All News 10:36 June 07, 2018

SEOUL, June 7 (Yonhap) -- The financial regulator said Thursday it will make a final ruling on a suspected accounting breach of Samsung BioLogics Co. without prejudice, based on facts and international accounting standards.

Kim Yong-beom, vice chairman of the Financial Services Commission (FSC), made the remarks as he opened a session that aims to confirm the alleged breach and measures it could take against Samsung BioLogics.

"All decisions and judgment will be made without prejudice, based on objective facts and international accounting standards," Kim told the session.

Financial authorities gave a preliminary notice earlier last month to Samsung BioLogics that it broke accounting rules in 2015, a charge strongly denied by the unit of Samsung Electronics Co.

Since then, financial authorities had held three rounds of reviews about the alleged accounting breach, but the review apparently failed to reach a consensus as FSC officials said there were some "majority and minority opinions" about the case.

Samsung BioLogics' corporate logo (Yonhap)

Samsung BioLogics' corporate logo (Yonhap)

The regulatory probe centered on questions about Samsung BioLogics' sudden profits in 2015.

After years of losses, Samsung BioLogics posted a net profit of 1.9 trillion won (US$1.76 billion) in 2015 after it changed the method used to calculate the value of its affiliate, Samsung Bioepis.

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

Before Samsung BioLogics went public in 2016, Samsung Electronics and Cheil Industries Inc. owned 40 percent stakes in the biosimilar maker, respectively.

People's Solidarity for Participatory Democracy, an influential South Korean civic group, has argued that Samsung BioLogics may have inflated its profit to raise the value of the company for the benefit of 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 since.

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