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SFC to Rule on Samsung BioLogics Issue on June 7
Punitive Measures Expected
SFC to Rule on Samsung BioLogics Issue on June 7
  • By Choi Mun-hee
  • June 1, 2018, 13:45
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The Securities and
The Securities and Futures Commission (SFC) is to convene on June 7 to rule on the fraud allegations against Samsung BioLogics.

The Accounting Oversight Deliberation Committee (AODC) held its third meeting on accounting fraud allegations against Samsung BioLogics on May 31. The eight members of the committee, however, failed to reach a conclusion. Their opinions are scheduled to be examined by the Securities and Futures Commission (SFC) under the Financial Supervisory Commission (FSC) on June 7.

The Thursday meeting of the AODC proceeded without the attendance of officials from Samsung BioLogics and the Financial Supervisory Service (FSS), which concluded that the company committed accounting fraud based on a year-long special audit on it.

The key issue is whether Samsung BioLogics committed an accounting fraud in 2015. In late 2015, Samsung Biologics adopted market value-based instead of book value-based valuation in recalculating the enterprise value of its subsidiary Samsung Bioepis. As a result, Samsung Bioepis became a profit-making company. At that time, Samsung BioLogics mentioned, as its reason for the change in accounting method, that it could lose control over Samsung Bioepis after call option exercise by Biogen, which founded Samsung Bioepis with Samsung BioLogics.

According to the FSS, Samsung BioLogics already knew that Biogen would not exercise a call option and intentionally committed fraud at that time. Although Biogen recently announced that it would exercise the option, the FSS claims that the announcement, which came after the first audit review committee meeting, does not justify the past fraud.

Those in the know are saying that the majority and minority opinions of the committee members are likely to be maintained in the SFC as the committee is an expert group acting as an advisor in this issue.

The FSS, which believes Samsung intentionally committed accounting fraud, calls for punitive measures against Samsung, including a penalty of six billion won (US5.4 million), legal action against the corporation and its representative, and dismissal of the company’s CEO.


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