Kyobo Life Foot Option 3rd Trial... Kyobo Life "Affinity Involved in Valuation"

The 4th Trial Date is October 15

[Asia Economy Reporter Ki Ha-young] The third trial concerning the manipulation of Kyobo Life Insurance's corporate valuation was held. Testimony emerged that the financial investor (FI) Affinity Consortium was involved in the process of Deloitte Anjin Accounting Firm evaluating Kyobo Life Insurance's put option price.

The Seoul Central District Court Criminal Division 22 held the third trial session on the 1st for key executives of Affinity and accountants from Anjin Accounting Firm, who were indicted for violating the Certified Public Accountant Act.

At the trial, Vice President Park of Kyobo Life Insurance appeared as a witness following the second trial and was questioned. The testimony mainly focused on the problems with the valuation conducted by accountants from Anjin Accounting Firm under the direction of Affinity officials. The unfairness of the valuation was discussed in terms of ▲issues with the valuation date ▲differences from previous valuations ▲use of inappropriate valuation methods ▲specific involvement of the Affinity Consortium.

Vice President Park argued that setting the stock price reference point used in the relative valuation method to June 30 instead of October 22 caused a distortion exceeding 300 billion KRW. Anjin Accounting Firm used the average stock price over the previous year as of the end of June 2018, but calculations show a difference of 64,000 KRW per share compared to using the stock price on October 22.

Park added, "Using a one-year or six-month average stock price in relative valuation is applied in M&A cases where the timing is uncertain, but put transactions have a clear exercise date, so this should not be done."

He also raised suspicions that Affinity was involved in the process of Anjin preparing the valuation report. Park stated, "The draft prepared by Anjin did not include a clause that the report could be provided to third parties or arbitration panels, but this was added under the direction of an Affinity Consortium official." There was also evidence that an Affinity official wrote and sent the cover letter that Anjin was supposed to prepare. He explained, "It appears that even the cover letter of the report was not directly written by Anjin Accounting Firm. While subordinates sometimes write such letters, I have never seen one written by a client company."

Affinity’s legal counsel focused on questioning the circumstances suggesting that Chairman Shin Chang-jae or Kyobo Life Insurance instigated former Kyobo Life Insurance union leader Lee Hong-gu to file complaints and accusations with the prosecution. They also argued, based on emails from Kyobo Life employees and statements made during prosecution investigations, that Chairman Shin could not have been unaware of the shareholder agreement details or the put option price calculation method.

The fourth trial session for two Affinity executives and three accountants from Deloitte Anjin Accounting Firm is scheduled for the 15th.

This content was produced with the assistance of AI translation services.