Korean regulator says Samsung BioLogics intentionally breached accounting rules

By PharmaCompass

2018-11-22

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Last week, South Korea’s top financial regulator said Samsung BioLogics Co Ltd intentionally breached accounting rules and inflated the company’s value ahead of its 2016 stock exchange listing. The IPO had raised US$ 2 billion. The regulator fined Samsung Biologics US$ 7 million (8 billion won) and recommended the company dismiss its CEO.

Samsung BioLogics is now facing a potential criminal investigation and delisting. Kim Yong-beom, vice chairman of the Financial Services Commission, said trading of Samsung BioLogics shares would be suspended following the decision and that the stock exchange would review the validity of its listing.

The regulatory review emanates from Samsung BioLogics’ sudden profits in 2015 after years of losses. Samsung BioLogics reported a net profit of 1.9 trillion won (US$ 1.68 billion) that year, after changing the method used to calculate the value of Samsung Bioepis, which is a joint venture with the US-based Biogen Inc.

Kim said no company has been delisted on accounting issues in South Korea so far.

The case threatens to be another scar for Samsung, the country’s biggest chaebol. Earlier this year, Y. Lee, vice chairman of Samsung Electronics Co, was jailed for bribery. He was later released as his jail term was suspended.

Through a statement that’s also posted on its website, Samsung BioLogics expressed regret over the financial regulator’s ruling, saying it was confident that the company didn’t violate accounting standards. Samsung BioLogics said it will file an administrative lawsuit against the decision.

The country’s financial watchdog began auditing Samsung BioLogics last year after several lawmakers and a civic group accused the company of improperly changing its Bioepis unit to an affiliate status — a move they said inflated the company’s value ahead of the IPO.

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