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THE INVESTOR
October 21, 2019
Big Reunion

Samsung

Top Samsung exec arrested in accounting scandal

  • PUBLISHED :June 05, 2019 - 16:08
  • UPDATED :June 05, 2019 - 17:44
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The Seoul Central District Court on June 5 approved pretrial detention of a Samsung Electronics executive vice president, who is suspected of having destroyed and hidden evidence linked to an alleged accounting fraud of biotech firm Samsung BioLogics.

The suspect, surnamed Lee, is a member of the tech giant’s task force that supports the operations of Samsung Group subsidiaries. He is accused of destroying accounting data and internal documents after a meeting on May 5, 2018, with Samsung BioLogics CEO Kim Tae-han.




“Given that the charges have been largely validated and the case is grave, and based on the results of the investigation so far, there are concerns (he will) destroy evidence,” the court ruled.

An arrest request for another Samsung executive vice president, surnamed Ahn, was rejected as the court judged he was not deeply involved in the scheme.

The Korean prosecution suspects that some top execs of Samsung Electronics and Samsung BioLogics inflated the value of the drug manufacturer right before it went public in November 2016.

The then unprofitable drug manufacturer reported sudden profits in 2015 after it changed its method to calculate the valuation of its stake in Samsung Bioepis, a joint venture with US-based biotech company Biogen.

It is thought to have beene aimed at enhancing the valuation of textile firm Cheil Industries’ stake in the drug company. Samsung Electronics Vice Chairman Lee Jae-yong is the largest shareholder of Cheil, which was merged with construction firm Samsung C&T on Sept. 1, 2015.

Some civic groups claim that the series of mergers and acquisitions and value inflation schemes helped Lee to cement his control over Samsung C&T, the de facto holding firm of the group, and all subsidiaries and affiliates.

Two executive vice presidents and two vice presidents from the tech giant were arrested on the same charges in May while a Samsung Bioepis executive was arrested last month for ordering employees to delete 2,100 computer files, including those that can be used against Lee in court.

By Kim Young-won (wone0102@heraldcorp.com)

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