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(LEAD) Samsung Electronics president undergoes 17 hours of questioning about biotech accounting scandal

All News 15:49 June 12, 2019

(ATTN: UPDATES with indictment of ranking Samsung executives in paras 8-9)

SEOUL, June 12 (Yonhap) -- Chung Hyun-ho, president of Samsung Electronics' business support task force, underwent over 17 hours of questioning by prosecutors about his suspected involvement in alleged accounting fraud at the company's biotech affiliates before being allowed to return home early Wednesday morning.

The 59-year-old Chung, known as one of the closest aides to Samsung Electronics Vice Chairman Lee Jae-yong, didn't respond to questions from reporters as he left the Seoul Central District Prosecutors' Office in southern Seoul at 2:30 a.m.

Chung, who entered the prosecutors' office at 8:50 a.m. Tuesday, was believed to have been grilled by prosecutors for over 17 hours about his role in the conglomerate's alleged systematic attempt to cover up accounting irregularities at contract drug manufacturer Samsung BioLogics and its affiliate, Samsung Bioepis.

Chung Hyun-ho, president of Samsung Electronics' business support task force, leaves the Seoul Central District Prosecutors' Office in the early morning of June 12, 2019, after being questioned about alleged accounting fraud at biotech affiliates. (Yonhap)

Prosecutors suspect that Chung ordered the destruction and manipulation of evidence about window dressing by the two biotech affiliates ahead of the launch of their probe last year. Samsung Electronics is believed to be functioning as a control tower for other Samsung Group companies.

Chung reportedly denied his participation in the attempt to cover up evidence.

The window dressing was allegedly committed in 2015 to inflate the valuation of Samsung BioLogics ahead of its initial public offering in 2016. Civic activists have claimed the alleged window dressing was intended to enhance Lee's control of Samsung Group by seeking to inflate Cheil Industries Inc.'s stake in Samsung BioLogics ahead of Cheil's merger with Samsung C&T Corp. in 2015.

One of Chung's subordinates, who was accused of deciding at a company meeting on May 5, 2018, to manipulate and destroy evidence of accounting irregularities by the two Samsung biotech companies, was arrested last Wednesday, while seven other ranking executives of the three Samsung companies were arrested in May on the same charges.

On Wednesday, two of the arrested Samsung executives were indicted and referred to court trials on charges of attempting to cover up evidence in the accounting scandal.

The two are a senior executive vice president of Samsung Electronics' business support task force, surnamed Kim, and a senior executive vice president of Samsung Electronics in charge of human resources, surnamed Park.

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 recent raid.

Prosecutors suspect that the alleged scheme to destroy evidence was finally approved at a top-level meeting at a Samsung Group guesthouse in Seoul on May 10, 2018, which was attended by Lee and Chung.

Samsung has denied the allegations, saying the latter meeting was held to discuss business plans of the two biotech companies.

Prosecutors say they will decide later whether to request an arrest warrant for Chung and whether to summon Lee.


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