S.Korean regulator rules Samsung's bio unit breaches accounting rules

Source: Xinhua| 2018-11-14 17:46:47|Editor: mmm
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SEOUL, Nov. 14 (Xinhua) -- South Korea's financial regulator ruled on Wednesday that the biopharmaceutical unit of Samsung Group, the country's biggest family-controlled conglomerate, breached accounting rules.

The Securities and Futures Commission under the Financial Services Commission (FSC) said that its regulatory probe came to a conclusion that Samsung BioLogics "intentionally" violated accounting standards by arbitrarily interpreting and applying the standards.

Samsung BioLogics, set up in 2011, launched a joint venture, Samsung Bioepis, with the U.S.-based Biogen in 2012.

The biopharmaceutical unit of Samsung altered the method to evaluate its affiliate, Bioepis, into the mark-to-market valuation in 2015, leading to a net profit of 1.9 trillion won (1.7 billion U.S. dollars) in the year after years of losses.

Samsung BioLogics has been suspected of committing the fraudulent accounting to help Samsung Electronics Vice Chairman Lee Jae-yong, an heir apparent of Samsung Group, inherit a management control over the entire group from his ailing father Chairman Lee Kun-hee.

In 2015, Cheil Industries and Samsung C&T merged into Samsung C&T, the currently de-facto holding company of Samsung Group that was evaluated bigger than Cheil Industries, controlled by the Samsung heir at the time.

By overvaluing Cheil Industries through the overvalued Samsung BioLogics, the Samsung heir was believed to have controlled the de-facto holding company, one of key shareholders of Samsung Electronics.

The Samsung family has been controlling the Samsung Group with a fraction of shares through cross-shareholding.

FSC Vice Chairman Kim Yong-beom told a press briefing that the financial regulator will cautiously review whether a separate regulatory probe into Samsung C&T would be needed as Samsung Biologics is an affiliate of Samsung C&T.

The FSC referred the case to the prosecution office. The Korea Exchange, the country's bourse operator, suspended after-hours trading of Samsung BioLogics right after the FSC ruling.