Shares of Samsung BioLogics Co. have been battered this week after prosecutors reopened investigations into the bio firm as well as other key units of Samsung Group on suspicion of accounting violations and other irregularities.
Samsung BioLogics shares closed Friday down 4.21 percent at 341,000 won ($299.83), falling below 350,000 won for the first time in three months. Its shares have dropped by more than 7 percent over the past three days amid renewed jitters among investors over the relentless regulatory probe into Samsung’s youngest company.
Last November, Korea’s top financial regulator concluded Samsung BioLogics intentionally breached accounting rules by changing the valuation method of its stake in a joint venture to inflate its profits ahead of an initial public offering in 2016. Its shares have plummeted nearly 15 percent since May 2018 when regulators opened an investigation into the allegations.
Samsung BioLogics denied any wrongdoing and has filed an administrative suit against the regulator.
Despite the company’s denial, prosecutors reopened investigations last year and in December raided the head offices of Samsung BioLogics, its subsidiary Samsung Bioepis, Samsung Group’s de-facto holding company Samsung C&T Corp., and several accounting firms that advised Samsung companies.
About three months after the first raid, investigators on Thursday searched the offices of Samsung C&T again as well as Samsung SDS Co., to examine whether BioLogics’ fraudulent accounting helped lift the value of Cheil Industries during its controversial merger with Samsung C&T in 2015. Cheil Industries at the time was the top shareholder of BioLogics.
The merger, which finally passed despite staunch opposition, was widely viewed as a move for Samsung’s heir-apparent, Jay. Y. Lee, to strengthen his grip over the family-run empire and take over from his father Lee Kun-hee, who has been hospitalized following a heart attack in 2014.
A day after the second raid on Samsung affiliates, prosecutors searched the offices of Korean Exchange, accusing the operator of making exemptions for the company in its 2016 IPO, although it had not been making any money then.
By Jung Hee-young and Kim Hyo-jin
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