Samsung BioLogics accused of accounting violations
South Korea’s financial services regulator has ruled that Samsung BioLogics, the biotech drug arm of Samsung Group, the country’s biggest family-run conglomerate, ‘intentionally violated accounting rules’ and has imposed sanctions on its auditors
14 Nov 2018
The Securities and Futures Commission (SFC) ruled that Samsung BioLogics intentionally violated accounting rules by changing the accounting treatment of its holdings in its subsidiary Samsung Bioepis in 2015, ahead of its listing. The company denies that this was the case.
In a statement, the SFC said it had decided to recommend dismissal of Samsung BioLogics’ chief executive; impose a fine of ₩8bn (£5.5m); and refer the case to prosecutors.
In addition, the SFC said Samjong KPMG, Samsung BioLogics’ auditor, will be given a fine of ₩170m and banned from auditing the company over the next five years ‘for its gross negligence’ and ordered to suspend those accountants involved. Deloitte Anjin will be barred from auditing Samsung BioLogics over the next three years for its negligence.
The Korean stock exchange is to suspend trading of Samsung BioLogics’ stocks temporarily while it reviews whether the company is eligible to remain listed.
In a statement, Samsung BioLogics denied the regulator’s charges.
The company said: ‘Samsung BioLogics would like to sincerely apologize to our clients and shareholders for the confusion caused by the recent accounting issue.
‘However, the SFC's announcement today is very unfortunate as it is our firm belief that Samsung BioLogics has not breached any accounting rules at all.
‘In 2016, not only did the due diligence from the Korean Institute of Certified Public Accountants (KICPA) conclude that there were no problems in the accounting treatment, but we also received an official response from the Financial Supervisory Service (FSS) and opinions from multiple accounting firms that the accounting treatment was indeed done correctly.
‘Despite such facts, it is very disappointing that the SFC decided today that Samsung BioLogics intentionally infringed the accounting rules.
‘Therefore, we will file an administrative lawsuit to clearly prove the legality of Samsung BioLogics’ actions.’
Report by Pat Sweet