Prosecution Indicts Samjeong KPMG in Connection with Samsung Biologics Accounting Fraud Case

[Asia Economy Reporter Baek Kyunghwan] The prosecution investigating the illegal succession of management rights by Samsung Electronics Vice Chairman Lee Jae-yong has indicted without detention two accounting firms and accountants involved in the accounting fraud of Samsung Biologics (Samsung Bio). Earlier, in September, the prosecution had already sent 13 Samsung Group officials, including Vice Chairman Lee Jae-yong, to trial on charges of illegal succession of management rights.

On the 9th, the Special Trial Team 2 of the Seoul Central District Prosecutors' Office (Chief Kim Young-cheol) announced that on the 6th, they indicted without detention the accounting firm Samjong KPMG (Samjong) and two accountants affiliated with it, Mr. A (49) and Mr. B (46), on charges of violating the Act on External Audit of Stock Companies, etc.

The prosecution believes that Samjong engaged in accounting fraud to resolve the "call option liability of 1.8 trillion won" of Samsung Bio, which had been omitted in previous accounting after the merger of Cheil Industries and Samsung C&T in September 2015. At that time, Biogen had a call option contract to purchase half of the shares of Samsung Bio's subsidiary, Samsung Bioepis, but Samjong did not record this as a liability in Samsung Bio's accounts and concealed it even after the merger, which is the basis of the charges.

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