Financial Supervisory Service to temporary judge on accounting fraud charge on Samsung Bio… Concerns to rise over stock market
Kim Min Soo | minsu@ | 2018-05-02 11:32:49
The financial authorities have temporarily judged that there is suspicion of accounting fraud as a result of the special supervision of Samsung Bio Logics for a year. The final result has not been released. However, it is inevitable that the final discipline will be brought to the conclusion.
The Financial Supervisory Service stated on May 1 that it had conducted a special audit of Samsung Bio Logics from March last year, which resulted in a violation of accounting procedures. The FSS also notified Samsung Bio Logics and its auditor, Samjung & Anjin Accounting Corporation, of the preliminary notice of the action that summarized the planned actions along with the violation.
On the other hand, the Financial Supervisory Service believes that it was inappropriate for Samsung Bio Logics to convert its subsidiary Samsung Bio E Pease into a subsidiary of a subsidiary to account for it.
Samsung Bio Logics, in 2015, has switched from a subsidiary to a related company when its new drug, Samsung Biotech, a subsidiary with a stake of more than 90%, is licensed in Europe. Besides, according to the related regulations, the fair value was evaluated and accounted for, not the acquisition price.
The possibility of the call option of Biogen in the US (the right to buy stocks at a fixed price) will increase since Samsung Biologics has started to achieve results such as approval of new drugs. Therefore, it was converted into a related company. Samsung Bio Epic market value has skyrocketed due to the accounting process, and Samsung Bio Logics, which has been in the red for four consecutive years since 2011, turned to profit of KRW 1.9 trillion in 2015. Also, Samsung Bio Logics was listed on the KOSPI in 2016, following the performance of its management. At the time, the call option condition, which already existed, was revealed just before the IPO. It has also been argued that the measures that raised the value of subsidiaries were inadequate.
The financial authorities will propose an agenda to the Supervisory Committee, which will be held on May 10 after giving the Samsung Bio Logics a chance to nominate the financial authorities and decide whether to finalize the financial accounting at the Securities and Futures Commission.
An expert of the Financial Supervisory Service said, "Before the Supervisory Board and the Supreme Court approved the agenda, we passed the violation and the details of the planned action to the company and the auditor." The final judgment will be finalized at the meeting.
Despite the final ruling has not yet been made, it has been confirmed that the conversion of affiliates has been used as a shortcut method for misappropriating accounting. If it is revealed that it has been listed on the basis of this, Samsung Bio Logics is concerned about the abolishment of the disciplinary punishment as well as the delisting. In this case, it is unlikely that the Korea Exchange, which had been in charge of the Korean public accounting society and the listing examination who gave the indemnity in the previous Supervision, will be denounced. An official of the Korea Exchange said, "If the conclusion is reached, the reasons for the cancellation of the listing will result in a fair examination of the eligibility of the listing."
It will have a huge impact on the stock market, which will open on May 2 once Samsung F & M`s 7th-largest KOSPI market share is confirmed. Especially, Samsung Bio Logics` accounting problems are also involved in the merger of Samsung C & T and Cheil Industries. Shim Sang-jung and the Pyeongyang alliance argue that this kind of accounting treatment has increased the value of Cheil Industries, the major shareholder of Samsung Bio Logics, and benefited from the merger of Samsung C & T and Cheil Industries in 2016.
Samsung Bio Logics, which received the current notice, has not disclosed its official position yet. However, it is likely to strongly reject the findings of the Financial Supervisory Service (FSS) at the Supervisory Service and the Supervisory Board.
Samsung Bio Logics said that there is no big problem ahead of the debate, as it has already been legally recognized through a private association, accounting firms, securities firms, and legal firms. Also, regarding the merger of Samsung C & T and Cheil Industries, it was not subject to suspicion because Samsung Biotech was changed to affiliated company after calculating the merger ratio of the two companies.
By Kim Min Soo minsu@
[ copyright ⓒ The Digitaltimes ]
The Financial Supervisory Service stated on May 1 that it had conducted a special audit of Samsung Bio Logics from March last year, which resulted in a violation of accounting procedures. The FSS also notified Samsung Bio Logics and its auditor, Samjung & Anjin Accounting Corporation, of the preliminary notice of the action that summarized the planned actions along with the violation.
On the other hand, the Financial Supervisory Service believes that it was inappropriate for Samsung Bio Logics to convert its subsidiary Samsung Bio E Pease into a subsidiary of a subsidiary to account for it.
Samsung Bio Logics, in 2015, has switched from a subsidiary to a related company when its new drug, Samsung Biotech, a subsidiary with a stake of more than 90%, is licensed in Europe. Besides, according to the related regulations, the fair value was evaluated and accounted for, not the acquisition price.
The possibility of the call option of Biogen in the US (the right to buy stocks at a fixed price) will increase since Samsung Biologics has started to achieve results such as approval of new drugs. Therefore, it was converted into a related company. Samsung Bio Epic market value has skyrocketed due to the accounting process, and Samsung Bio Logics, which has been in the red for four consecutive years since 2011, turned to profit of KRW 1.9 trillion in 2015. Also, Samsung Bio Logics was listed on the KOSPI in 2016, following the performance of its management. At the time, the call option condition, which already existed, was revealed just before the IPO. It has also been argued that the measures that raised the value of subsidiaries were inadequate.
The financial authorities will propose an agenda to the Supervisory Committee, which will be held on May 10 after giving the Samsung Bio Logics a chance to nominate the financial authorities and decide whether to finalize the financial accounting at the Securities and Futures Commission.
An expert of the Financial Supervisory Service said, "Before the Supervisory Board and the Supreme Court approved the agenda, we passed the violation and the details of the planned action to the company and the auditor." The final judgment will be finalized at the meeting.
Despite the final ruling has not yet been made, it has been confirmed that the conversion of affiliates has been used as a shortcut method for misappropriating accounting. If it is revealed that it has been listed on the basis of this, Samsung Bio Logics is concerned about the abolishment of the disciplinary punishment as well as the delisting. In this case, it is unlikely that the Korea Exchange, which had been in charge of the Korean public accounting society and the listing examination who gave the indemnity in the previous Supervision, will be denounced. An official of the Korea Exchange said, "If the conclusion is reached, the reasons for the cancellation of the listing will result in a fair examination of the eligibility of the listing."
It will have a huge impact on the stock market, which will open on May 2 once Samsung F & M`s 7th-largest KOSPI market share is confirmed. Especially, Samsung Bio Logics` accounting problems are also involved in the merger of Samsung C & T and Cheil Industries. Shim Sang-jung and the Pyeongyang alliance argue that this kind of accounting treatment has increased the value of Cheil Industries, the major shareholder of Samsung Bio Logics, and benefited from the merger of Samsung C & T and Cheil Industries in 2016.
Samsung Bio Logics, which received the current notice, has not disclosed its official position yet. However, it is likely to strongly reject the findings of the Financial Supervisory Service (FSS) at the Supervisory Service and the Supervisory Board.
Samsung Bio Logics said that there is no big problem ahead of the debate, as it has already been legally recognized through a private association, accounting firms, securities firms, and legal firms. Also, regarding the merger of Samsung C & T and Cheil Industries, it was not subject to suspicion because Samsung Biotech was changed to affiliated company after calculating the merger ratio of the two companies.
By Kim Min Soo minsu@