3 Celltrion companies broke accounting rules, FSC determines
Three listed Celltrion companies engaged in transfer pricing in violation of accounting rules, according to the Financial Services Commission (FSC).
The FSC will not be referring the infractions to the prosecution as the acts were found to be "unintentional."
In a meeting Friday, the regulator determined that Celltrion, Celltrion Healthcare and Celltrion Pharm were grossly negligent for the instances of transfer pricing and violating government accounting guidelines.
Penalties will include additional taxes, a recommendation to remove responsible executives and the appointment of auditor to prevent a repeat of the infractions.
The companies could be taxed with up to 20 percent of the profit generated from the wrongful transactions. Celltrion is said to have gained 130 billion won ($105 million), Celltrion Healthcare 160 billion won and Celltrion Pharm 13 billion won in the scheme in 2016.
Details will be announced this week.
The three companies had been investigated by the Financial Supervisory Service (FSS) over the past four years for the alleged accounting irregularities, and the companies were on the verge of being delisted.
Concerns were centered on whether Celltrion Healthcare and Celltrion Pharm, marketing companies that handle the sale of Celltrion products, were illegally profiting from transactions with the pharmaceutical manufacturer.
Profit shifts of that nature would potentially benefit Seo Jung-jin, chairman of the three companies.
Seo owns 95.5 percent of Celltrion Holdings, which owns 20 percent of Celltrion, which again owns 55 percent of Celltrion Pharm. The CEO also owns 100 percent of Celltrion Healthcare Holdings, which owns 24.3 percent of Celltrion Healthcare.
"We respect the decision of the financial authorities," Celltrion said in a statement on Friday.
"The transactions that have been determined illegal took place in the past, so they have little to no influence on subsidiaries. We will make our best efforts to go back to our business and meet the demands of the market."
BY YOON SO-YEON [firstname.lastname@example.org]