All the hands-on members of the Financial Supervisory Service (FSS), who had joined in making a preliminary conclusion that Samsung BioLogics committed accounting fraud, got together at 2 pm on March 17 in the conference room on the 16th floor of the Integrated Government Complex. The members of the Accounting Oversight Deliberation Committee (AODC), including chairperson Kim Hak-soo, also entered the room and started the review on the alleged accounting fraud of Samsung BioLogics.
The meeting proceeded deliberately as expected. Although it was expected that the adversary system would be adopted to guarantee Samsung BioLogics’ right of reply, the board decided to apply it from the next session considering the extensiveness of the agenda and the time for the FSS and Samsung BioLogics to make their cases.
The Accounting Oversight Deliberation Committee is an advisory body to the Securities and Futures Commission (SFC), but its decision is expected to have decisive influence on the final conclusion to be made by the SFC.
According to the procedure, the FSS started the session and listed the problems of Samsung BioLogics, which had been revealed through a special audit conducted for a year, in front of the committee members. Reportedly its data of more than 100 pages contained the information that Samsung BioLogics had arbitrarily changed the method of evaluating Samsung Bioepis' stakes. The committee members listened attentively to the entire agenda reported by the FSS and asked additional questions about the reasons for the conclusion that Samsung BioLogics committed accounting fraud.
Following the FSS’s arguments, Samsung BioLogics began to rebut. CEO Kim Tae-han and CFO Kim Dong-jung from Samsung BioLogics participated in the refutation among others. In particular, CEO Kim refuted every point that FSS made on the possibility of the call option of the company and the reason for changing the accounting standard, explaining with power point himself.
Committee chairman Kim Hak-soo, who serves as the chief judge, and the committee members who act as associate judges said they heard enough from both sides. The two sides are expected to have a full-scale debate in the second session scheduled next week. The adversary system is a system in which plaintiffs and defendants argue fiercely as in a courtroom. The FSS will act as the plaintiff and prosecutor, and Samsung BioLogics must prove its innocence as a defendant. There was a controversy over fairness as Park Kwon-chu, who serves as the representative prosecutor, also acts a judge. However, it has been pointed out that the fairness has been ruined as the FSS, which has conducted the special audit on Samsung BioLogics, should listen to the opinions of the company and draw a conclusion.
Samsung BioLogics CEO Kim Tae-han met with reporters before the committee session and said, "The fact has not changed. I don’t know what to say. It is preposterous that there has to be another supervision on what was already tested over three times by the FSS and other institutes in 2015.” He added, “The FSS told the media that we are involved in accounting fraud before the AODC's decision. We will hold them responsible for that. We will clarify everything with patience.”
Chairman Kim Hak-soo told the committee members that he let a shorthand report, emphasizing that in case the content of proceedings is leaked, it will be dealt with strictly. An FSS official said, "Kim noted that leaking information would be a violation of the confidentiality pledge and would be subject to punishment under the External Audit Act. He also warned that those who are involved in leaking information can be dismissed.”