The Seoul Central District Prosecutors Office are seeking an arrest warrant of two executives of Samsung Bioepis for allegedly destroying evidence linked to Samsung BioLogics’s accounting fraud allegations.
|Samsung BioLogics’ headquarters in Songdo, Incheon.|
The charges brought against the two include falsifying and destroying evidence and violating external audit laws. The arrest warrant is the first one filed after the Securities and Futures Commission (SFC) ruled that the company intentionally breached accounting rules in 2015 ahead of its initial public offering.
According to the prosecutors, the two executives deleted data that may be of concern to the case brought up against Samsung BioLogics from the computers and mobile phones of Samsung Bioepis employees. Also, a statement supporting that Samsung BioLogics deliberately breached accounting rules have come to light through the prosecutor’s investigation.
“Some officials at the accounting firm responsible for the merger between Cheil Industries and Samsung C&T said that they had not known about Biogen’s call option clause until the end of the merger in 2015,” the Seoul Central District Prosecutors Office said.
The statement goes against Samsung BioLogics' previous claim that it did not intentionally conceal the existence of the call option as the accounting firm deemed that it met the accounting standards at the time.
While establishing Samsung Bioepis in 2012, Samsung BioLogics gave Biogen a call option to buy 50 percent minus one share. However, Samsung BioLogics had not made public such facts until 2015, when it changed Samsung Bioepis from a subsidiary to an affiliated company stating that the possibility of the call option of Biogen is high.
The FSC has suspected that Samsung BioLogics kept intentionally hiding the call option, which should have been recognized as a liability in the beginning and changed the accounting standard to inflate the value of Bioepis.
Until now, the company has claimed that it did not hide the call option citing the accounting firms as evidence. With the new testimony from the accountants to the prosecution, however, Samsung BioLogics is on the verge of having its defense statement from collapsing.
When asked about the Samsung BioLogics’ response to the announcements made from the prosecution, the company said it would not respond to the prosecution’s statement describing it as unofficial.