2 Samsung Electronics execs attend arrest warrant hearing in accounting scandal

SEOUL, May 10 (Yonhap) -- Two Samsung Electronics executives attended a court hearing in Seoul Friday over the possible issuing of arrest warrants for them on charges of attempting to destroy evidence related to alleged accounting fraud at sister companies.

The two -- a vice president surnamed Seo in charge of corporate security affairs and a vice president surnamed Baek responsible for business strategies -- appeared at the Seoul Central District Court at around 10:30 a.m. to attend the hearing that will review the legality of their pretrial detention. The court's ruling is expected in the evening.

Seo and Baek did not answer questions from reporters who asked whether they were instructed by the top management or whether they played a role in attempting to conceal accounting documents of Samsung BioLogics Co., a biopharmaceutical unit of Samsung Group.

On Wednesday, the Seoul Central District Prosecutors' Office requested arrest warrants for the two executives, accusing them of trying to conceal and manipulate accounting documents and internal reports of Samsung BioLogics and its subsidiary Samsung Bioepis last summer amid a prosecutors' investigation into the two companies' suspected accounting fraud.

Prosecutors suspect that Samsung BioLogics intentionally violated accounting rules in 2015 to inflate the valuation of its stake in Samsung Bioepis ahead of its initial public offering a year later.

Prosecutors said Seo and Baek also ordered tens of Samsung BioLogics and Samsung Bioepis officials to delete all suspicious documents and text from their mobile phones and notebooks.

One Samsung BioLogics employee and two Samsung Bioepis officials have already been detained on charges of participating in the alleged groupwide attempt to destroy criminal evidence. Prosecution investigators found a computer server and tens of notebooks concealed under the floor of Samsung BioLogics plant in Incheon, west of Seoul, in a raid earlier this week after the arrested employee made a confession.

Prosecutors said they plan to widen their probe to other top Samsung Group executives, including those at Samsung SDS, an information technology services affiliate, raising suspicion that there has been a systematic and extensive attempt on a groupwide level to destroy evidence.

The nation's financial watchdog earlier judged in its own inquiry that the alleged fraudulent accounting by Samsung BioLogics possibly amounts to 4.5 trillion won (US$3.9 billion).

The then-loss making Samsung BioLogics reported sudden profits in 2015 after it changed the method used to calculate the valuation of its stake in Samsung Bioepis, a joint venture with U.S.-based Biogen Inc.

Civic groups claimed the alleged fraud was aimed at enhancing heir apparent Lee Jae-yong's control of Samsung Group.

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

ycm@yna.co.kr
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