Court sides with Samsung Biologics over accounting fraud

Industry

Court sides with Samsung Biologics over accounting fraud

Published: 14 Aug. 2024, 18:57

SARAH CHEA
chea.sarah@joongang.co.kr

Samsung Biologics CEO John Rim speaks during the annual 42nd J.P. Morgan Healthcare Conference at the main Grand Ballroom in the Westin St. Francis Hotel in San Francisco, California. [SAMSUNG BIOLOGICS]

The Seoul Administrative Court on Wednesday ruled in favor of Samsung Biologics for alleged accounting fraud, canceling a fine imposed on the Korean biotech company by the Financial Services Commission (FSC).

The ruling came six years after Samsung filed an administrative litigation against the FSC which concluded in 2018 that the company was engaged in accounting fraud worth some 4.5 trillion won ($3.3 billion).

"The cancellation is reasonable as there are some parts that cannot be recognized as accounting fraud," the court said on Wednesday, adding that some accounting is considered incorrect such as falsely written business statements.

A securities commission of the FSC in 2018 fined 8 billion won to Samsung saying that it deliberately manipulated the financial statements of Samsung Bioepis, its biosimilar subsidiary, to increase the company's value ahead of its initial public offering (IPO) in 2015.

The financial watchdog said it used a different accounting standard and made Bioepis, which suffered operating losses for four straight years at the time, record a net profit of 1.9 trillion won in 2015.

The accounting manipulation resulted in increasing the value of Samsung Bioepis from 290 billion won to 4.8 trillion won, the FSC said.

The financial watchdog said it will thoroughly review the sentencing and decide whether to appeal it.

BY SARAH CHEA [chea.sarah@joongang.co.kr]