A large-scale accounting scandal has broke out in Samsung Electronics Dubai. The incident was exposed through an internal inspection, and some Samsung Electronics headquarters employees are currently staying in Dubai to go over its accounting data.
The Dubai office, which had annual operating profits of approximately 100 billion won (US$85.5 million), recently reported that it recorded losses in the first quarter of this year. Samsung Electronics, in response, examined its ledgers and uncovered the scandal.
At present, Samsung Electronics has 143 subsidiaries abroad, and it is checking the accounting data of all of its sales offices, including that in Dubai. “In the Dubai office, some items that have to be regarded as costs have been overlooked, to cause an over-appropriation in operating profits, but the case does not constitute embezzlement,” a company representative explained.
It is expected that the inspection of overseas sales subsidiaries will result in follow-up measures such as organizational restructuring. The top management’s stance is that such measures should come into play, regardless of the presence or absence of an accounting scandal, when an inefficient use of corporate resources is found out as a result of an inspection.
The Samsung Group has put an emphasis on proper financial management since its inception. A lot of financial experts have assumed key positions in the group and have been named as the CEOs of its subsidiaries. However, the scandal in Dubai is a disgrace. It is said that the top management is searching its soul at this moment so that the entire group’s pursuit of financial transparency is not doubted because of one scandal in a single overseas office. This is the first time that the Samsung Group has carried out an overall inspection of accounting matters.