South Korean prosecutors will speed up the probe into alleged accounting fraud of Samsung Biologics by focusing on securing evidence as to whether Samsung’s now-defunct control tower was involved in the fraud. Investigators plan to summon former and incumbent employees of the biotechnology firm within this week, according to sources Sunday.
The prosecution raided the main office of Samsung BioLogics in Songdo, Incheon, over the allegation the company had illegally inflated the company’s value. Separately, it also searched four auditors, including KPMG Samjong, Deloitte Anjin, Samil PwC and EY Han Young, over the alleged fraud.
Investigators plan to start analyzing confiscated documents and are also “mediating schedules when to summon related people.”
They are expected to focus on securing evidence to prove alleged illegal activities between Samsung’s Future Strategy Office, the group’s former core governing body, and Samsung BioLogics, and how the two had collaborated on inflating the company’s value.
Prosecutors believe that Samsung’s former control tower had orchestrated such a scheme for the smooth leadership succession of Samsung Group’s heir apparent, Lee Jae-yong.
The office of Samsung Vice President Kim Yong-kwan, formerly an executive at Samsung Group’s Future Strategy Office, was also raided. Kim was in charge of internal auditing of Samsung Biologics when the firm was preparing for its 2016 market debut.
The prosecutors’ investigation began in November when the Securities and Futures Commission, the auditing arm of the Financial Services Commission, reported Samsung Biologics’ case to prosecutors. The financial regulator ruled that Samsung BioLogics had inflated the value of its business by 4.5 trillion won ($4 billion).
The alleged accounting fraud helped boost the value of Cheil Industries, which held a 46.3 percent stake in Samsung BioLogics in 2015. At the time, Lee Jae-yong was a major stakeholder in Cheil.
With the inflated value of Cheil, Lee smoothly became the largest shareholder of Samsung C&T after the 2015 merger of Cheil and Samsung C&T, another key unit of South Korea’s richest conglomerate.
Samsung BioLogics has denied any wrongdoing, claiming the change in accounting methods complied with international accounting standards. It has also lodged an administrative suit in objection to the FSC decision.
By Shin Ji-hye (email@example.com)