April 20, 2024

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[THE INVESTOR] A civic activist group said on July 19 it has filed a complaint with the prosecution against the chief executive of Samsung BioLogics following Korea’s top financial regulator’s ruling that the company had intentionally breached accounting rules.

The nonprofit watchdog People’s Solidarity for Participatory Democracy urged the prosecutors to probe the Incheon-based contract drug manufacturer, claiming that the it had dropped a regulatory filing for the sake of Samsung founding family to make profit from the 2015 merger between Samsung C&T and Cheil Industries.

 

PSPD activists pose at the Prosecutor's office on July 19 after filing a complaint against the CEO of Samsung BioLogics.

The missing information affected the valuation of Samsung Biologics and its subsidiary Samsung Bioepis.

“They seem to have needed to overestimate the value of Cheil Industry’s subsidiary Samsung BioLogics in order to push the merger through,” the group said. It also filed a complaint against the heads of Samsung’s auditing firm Samjong KPMG and Deloitte Anjin.

The group criticized the Financial Services Commission for not making a decision on major allegations that the company was involved in.

On July 12, the regulator concluded that Samsung BioLogics clearly violated accounting rules by dropping crucial information related to its joint venture agreement with Biogen. The FSC said it would refer the case to prosecutors and ask Samsung Biologics to dismiss executives.

However, the commission didn’t rule on whether Samsung also broke rules when it switched to valuing its stake in Samsung Bioepis at fair market value instead of book value in 2015, citing lack of related information.

The activist group claimed Samsung BioLogics deliberately cooked its accounting books when changing the valuation method of its affiliate in order to inflate its own capital.

By Park Han-na (hnpark@heraldcorp.com)