중앙데일리

A market controlled by power

Nov 20,2018
Chun Young-gi
The author is a columnist for the JoongAng Ilbo.

The Securities and Futures Commission of the Financial Services Commission (FSC) accused Samsung BioLogics of intentionally tampering with its books to inflate its corporate value before going public. That led to the suspension of trading in the company’s stocks on the Kospi.

In fact, the accusation was the same as the one made by Kim Ki-sik, a civic activist-turned lawmaker, who headed the Financial Supervisory Service (FSS) six months ago. After stepping down three weeks after his inauguration as head of the financial watchdog due to questions concerning his ethical problems, he posted about the BioLogics case on his Facebook page on May 17. He wrote that the FSS planned to refer the Samsung BioLogics case to the Securities and Futures Commission and vowed to see it through during his term.
Samsung BioLogics looked guilty from the moment Kim made the declaration.

Power can shape the future: Kim’s vow came true. Some say that authorities have secured a smoking gun will corner Samsung BioLogics in court. It is up to the court to determine the validity of the suspicious document and judge whether the company committed fraud. But the question is how and when the document fell into the hands of authorities — or whether it was delivered from the company to the government while Kim was still in office.

Before activists moved into the Blue House and administration, the FSS came to the exact opposite conclusion. It agreed with outside auditors’ conclusion that found no wrongdoing. The FSS chief at the time gave a press briefing to make its conclusion official.

Samsung BioLogics, which debuted at 148,000 won ($132) on the Kospi on Nov. 10, 2016, hit 584,000 won a year later when Kim was in office. The stock, which had a market capitalization of 9.5 trillion won at the time of its IPO, was worth 22 trillion won last week before it was suspended.

The screen board of the Kospi shows the suspension of trading of Samsung BioLogics shares last week. The Securities and Futures Commission of the Financial Services Commission decided to stop trading of the company’s stocks after concluding that it committed accounting fraud. [NEWS1]
The FSS claimed that Samsung BioLogics inflated its corporate value by 6.9 trillion won through accounting fraud before the IPO. But its market value has actually ballooned by 12.5 trillion won after the IPO. Exactly what has been inflated? Samsung BioLogics is ranked sixth on the Kospi in value, adding appeal to Samsung stocks along with memory chips and smartphones. The stock serves as a bellwether for the Korean bio industry.

An up-and-coming star has been squashed just when it was attempting to get off the ground. Retailers who had high hopes on the company’s vision were burned. Moreover, confidence in the market system and stability has been shaken. The panic is spreading fast. If market rules and corporations’ fates hinge on governments that change every five years, few new ventures will start.

Market watchers are more worried about capital flight than individual stock woes. Foreigners currently hold 630 trillion won in Korean stocks and bonds. The Blue House activists are after not just Samsung BioLogics, but the entire Samsung empire. On Nov. 15, Kim Ki-sik was triumphant on his Facebook, declaring “We have climbed over one big mountain [referring to Samsung BioLogics]. But this is not the end. We must seek a special probe on Samsung C&T.”

Kim, no longer in public office, sounds like he is the commander giving tasks to the financial authority and prosecutors.

JoongAng Ilbo, Nov. 19, Page 30


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