Kyobo Life makes complaint against Deloitte Anjin

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Kyobo Life makes complaint against Deloitte Anjin

Kyobo Life, Korea’s third largest life insurance company by assets, filed a criminal complaint against accounting firm Deloitte Anjin, claiming it failed to determine a fair market value for its stock prices, triggering conflict among its shareholders.

This was a follow-up to a complaint last month with the U.S. Public Company Accountant Oversight Board, which establishes standards for registered public accounting firms.

“We believe Deloitte Anjin violated the Certified Public Accounting Act as well as moral standards in the process of evaluating the company’s value on the request of some financial investors,” the insurer said in a statement issued Thursday.

Kyobo Life’s complaint dates back to 2012, when a consortium of four investors purchased the Korean insurance company’s stock under an agreement that included a put option if the insurer’s chairman Shin Chang-jae failed to publicly list the company by 2015.

Put options allow a buyer to sell back the shares later on at a fixed price or through an agreed-upon assessment process.

The investors purchased 24 percent of the shares at 245,000 won ($200) per share.

The initial public offering didn’t go through, and the investors tried to exercise their put option on October 2018.

At the time, Deloitte Anjin, a financial consultant, assessed the market value of the shares for the put option at 409,912 won per share, which Kyobo Life claims was overpriced. The value, according to Kyobo, should have been based on similar companies’ one-year stock price between October 2017 and October 2018. Anjin Deloitte, however, used the companies’ share price between June 2017 and June 2018, when major insurance companies’ stock prices soared due to external factors.

Chairman Shin rejected the put option and the two sides are still in the process of arbitration at the International Chamber of Commerce. A trial will be held in September. If the mediators don’t accept Shin’s claim, obliging him to buy back the shares at 409,912 won, his 34 percent ownership of the insurance company could be jeopardized.

“The issue has become a management crisis that is snowballing the damage to the company,” Kyobo Life said.

“The latest act is a measure to recover credibility and the reputation of all stakeholders of Kyobo Life Insurance.”

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