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Govt, Samsung BioLogics face court battle after FSC refers case to prosecutors

2018.07.13 13:19:38 | 2018.07.13 15:34:22
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South Korea’s top financial authority referred the case of Samsung BioLogics Co. to the prosecution by concluding the biopharmaceutical company under Samsung Group had violated accounting and disclosure rules.

Shares of Samsung BioLogics were briefly suspended upon the ruling after the stock market closed Thursday. Its shares fell 6.41 percent to finish Friday at 401,500 won ($357.37).

The Securities and Futures Commission, the top policy-making board of the Financial Services Commission (FSC), upheld the results of the Financial Supervisory Service (FSS) probe into suspicious inflation of the corporate value of Samsung Bioepis, a biosimilar joint venture with U.S. drug maker Biogen, in 2015 in the process of converting the status of the unit from a subsidiary to an affiliate.

It asked prosecutors to press ahead with criminal investigation and recommended the company to dismiss executives. Samsung Biologics cannot be audited by its current auditor Samjogn KPMG for the next four years and must open books to an auditor designated by the state authority instead.

It withheld conclusion about Samsung BioLogics illegally and intentionally window-dressing the bottom line of Samsung Bioepis to add appeal to the initial public offering of the parent company and ordered the FSS to probe further.

While the review is under process, shares of Samsung BioLogics can trade normally. But the fact that the shares are under review for the possibility of suspension can scare investors.

Samsung BioLogics came under scrutiny upon suspicion raised by a civilian group over how a money-losing company suddenly turned out a profit of 1.9 trillion won in 2015. Samsung BioLogics said it evaluated its interest in Samsung Bioepis in market value instead of its book value when converting the corporate status from subsidiary into affiliate against the possibility of its U.S. partner exercising the call option according to the JV agreement of 2012, terms Samsung BioLogics only revealed after it faced investigation from regulators.

Biogen on June 30 announced it would exercise its call option and raise its stake to 49.9 percent from 5.4 percent.

Samsung BioLogics maintains it has committed no wrongdoings and vowed to take legal actions including a suit for court injunction against any FSC measures.

“Our accounting practices were in full compliance with the International Financial Reporting Standards,” said Samsung BioLogics in a statement.

By Jin Young-tae and Kim Hyo-jin

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]



  • Seoul Wed 26 September 2018
  • WED


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