Samsung BioLogics deliberately broke accounting rules: FSC
[THE INVESTOR] The Korean financial regulator said on July 12 it will refer Samsung BioLogics’ accounting “irregularity” to prosecutors after concluding that the contract drug manufacturer intentionally breached related regulations in 2015.
The decision came on the same day that the Securities and Futures Commission, auditing and decision-assisting arm of the country’s top financial regulator Financial Services Commission, held its fifth meeting to look into Samsung BioLogics’s controversial accounting practices, wrapping up what it claimed was “the longest period of review” in its history.
SFC Commissioner Kim Yong-bum.
“In today’s meeting, we concluded that Samsung BioLogics had clearly breached accounting standards and it deliberately omitted certain disclosures although it was aware of the possibility of a violation,” Kim Yong-bum, commissioner of the SFC, said during a press briefing.
The SFC also said the Incheon-based firm had not disclosed information related to its joint venture Samsung Bioepis it set up with US biotech Biogen. The information about giving the US firm a call option to up its stake in the JV to nearly 50 percent later became a key issue of the allegations because Samsung BioLogics claimed that it affected its accounting method change.
For the charge, financial authorities will refer the case to prosecutors for further investigation and ask the company to dismiss executives.
The SFC, however, failed to reach a conclusion on allegations that Samsung Bio Logics unfairly changed its control over the joint venture.
“For that, we will make a decision after collecting reports from the Financial Supervisory Service,” Kim said.
Samsung BioLogics has been defending itself to clear accounting fraud allegations since the Financial Supervisory Service had issued preliminary notice to the contract drug maker and its auditors of measures it could take concerning the suspected accounting rule breach on May 2.
In response to the ruling, the Samsung unit said it will seek possible legal action to convince its stakeholders of legitimacy of accouting practice that was in line with international accounting standards.
By Park Han-na (firstname.lastname@example.org)