SEOUL, South Korea (AP) — South Korea’s top financial regulator said Thursday it had found intentional breaches of accounting rules at Samsung Biologics, the contract drugmaking unit once seen as Samsung’s future growth engine.
The Financial Services Commission said it will bring the case to prosecutors and ask Samsung Biologics to dismiss executives in charge of accounting breaches. It will also penalize an accounting firm that audited Samsung.
The commission said the company failed to notify investors of crucial information related to its joint venture agreement with Biogen, a U.S. biotechnology company. The missing information affected the valuation of Samsung Biologics and its subsidiary, allowing Samsung Biologics to suddenly become profitable for the first time in 2015 before its listing in a Seoul stock market in 2016.
The commission said Samsung Biologics was aware that leaving out such information could constitute a violation of accounting rules.
The initial public offering of Samsung Biologics has been a source of controversy because the business was in heavy losses.
Samsung Biologics said it regrets the finding by the regulator and reiterated that it had not breached accounting rules. It said it will seek every possible legal measure to protect investors and other stakeholders.
Samsung Biologics counts Samsung C&T and Samsung Electronics as its two largest shareholders.