Head of Samsung BioLogics resummoned by prosecutors in accounting scandal

SEOUL, Kim Tae-han, president and CEO of contract drug manufacturer Samsung BioLogics, appeared again before prosecutors on Friday to be questioned about whether he abetted the destruction of evidence in an accounting scandal at the company.

Kim, who has headed the Samsung Group company since its founding in 2011, arrived at the Seoul Central District Prosecutors' Office at 10 a.m. before being grilled as a suspect over the decision-making process behind his company's alleged accounting irregularities.

The 62-year-old Kim is accused of masterminding the manipulation and destruction of accounting data and internal documents related to suspected window dressing committed in 2015 to inflate the valuation of Samsung BioLogics ahead of its initial public offering in 2016.

Prosecutors and financial market regulators suspect that Samsung BioLogics inflated its valuation by approximately 4.5 trillion won (US$3.9 billion) in 2015 after fraudulently changing the method used to calculate the value of its stake in Samsung Bioepis, a joint venture with U.S.-based Biogen Inc. After the accounting method changed, Samsung BioLogics swung to a profit.

The Securities and Futures Commission, a market watchdog, asked the prosecution last November to investigate Samsung BioLogics and Kim, saying the changed accounting method was "abnormal." Prosecutors then requested an arrest warrant for the 62-year-old Kim in late May but a Seoul court rejected it. Samsung BioLogics has claimed that the change of accounting methods and the revaluation of Samsung Bioepis in 2015 was in line with international accounting standards.

So far, eight executives of Samsung BioLogics, Samsung Bioepis and Samsung Electronics have been arrested on charges of participating in attempts to destroy evidence related to the suspected accounting fraud.

Prosecutors say they will again consider requesting an arrest warrant for Kim.

Civic groups claimed the alleged window dressing was intended to enhance Samsung Electronics Vice Chairman Lee Jae-yong's control of Samsung Group by seeking to inflate Cheil Industries Inc.'s stake in Samsung BioLogics ahead of Cheil's merger with Samsung C and T Corp. in 2015. Lee was the largest shareholder in Cheil Industries. It means a rise in the valuation of Samsung BioLogics has benefited Lee in his efforts to overhaul Samsung Group's governance structure.

In this regard, some watchers speculate that prosecutors' questioning of Lee may be imminent.

Source: Yonhap news Agency

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