September 30, 2023

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[THE INVESTOR] A Seoul court approved on Jan. 22 a request by Samsung BioLogics to put on hold the execution of penalties by the financial watchdog for the company’s suspected accounting irregularities.

The Seoul Administrative Court accepted Samsung’s argument that enforcing the penalties before a formal court ruling can cause unrecoverable damage to the firm. 

The penalties will be suspended until the court reaches a verdict in the litigation between the tech giant and the state.

Samsung BioLogics lodged an administrative suit against the decision made by the Financial Services Commission in November last year that the firm intentionally violated accounting rules to boost its value ahead of the 2016 initial public offering.

The then loss-making Samsung BioLogics reported in 2015 sudden profits after changing the method used to calculate the value of Samsung Bioepis, a joint venture with US-based Biogen.

The alleged irregularities boosted the value of a Samsung key unit in which heir apparent Lee Jae-yong had a controlling stake, and its merger with another affiliate effectively tightened his control over the conglomerate. 

The FSC has alleged that the suspected fraudulent accounting possibly amounts to 4.5 trillion won (US$3.98 billion).

The company has denied any wrongdoing, claiming the change in accounting methods was in line with international accounting standards.

By Song Seung-hyun and newswires (ssh@heraldcorp.com)