Kyobo Life Put Option Controversy, 3rd Appeal Trial to Be Held

Kyobo Life Insurance Gwanghwamun Building

[Asia Economy Reporter Changhwan Lee] The appellate trial for Deloitte Anjin Accounting Corporation and financial investor (FI) officials, who are on trial for allegedly applying the valuation date favorably to investors during Kyobo Life Insurance's valuation process, will be held on the 14th.

At 10:20 a.m. on the day at the Seoul High Court, the third appellate hearing is expected to include witness examinations, presentations from both sides, and legal arguments.

The appellate court will hear testimonies from Professor A of Ewha Womans University and Kyobo Life Insurance employee B, both witnesses requested by the prosecution. Professor A has participated as an expert member of the Ethics Investigation Review Committee of the Korean Institute of Certified Public Accountants. The Kyobo Life employee was selected as a witness because, as a subject of evaluation, they provided materials to the accounting firm.

The court's acceptance of the prosecution's witness requests is interpreted as an intention to examine whether the valuation of Kyobo Life Insurance and the disciplinary procedures against the Anjin-affiliated accountants were appropriate.

Kyobo Life Insurance filed a complaint with the prosecution in April last year, alleging that Deloitte Anjin Accounting Corporation intentionally set a higher price by violating standards in the process of calculating the fair market value (FMV) corresponding to the put option price held by its FI, the Affinity Consortium.

The prosecution judged that Affinity unduly intervened in the valuation process of Kyobo Life Insurance, and that the Anjin-affiliated accountants followed this, requesting prison sentences ranging from one year to one and a half years for the defendants.

However, the first trial court acquitted them. The first trial court stated, "It is difficult to recognize that Anjin's certified public accountants prepared the report under the influence of FI-side officials without exercising professional judgment during the valuation process," and "It is also difficult to see that the accountants prepared false reports for the improper financial gain of the FIs, thus all three certified public accountants and the other two FI-side officials are acquitted."

Following the prosecution's appeal, the second trial is underway, and the court is expected to schedule the final arguments and conclude the trial procedures at the third hearing held on this day. It is anticipated that the trial outcome will also impact Kyobo Life Insurance's ongoing initial public offering (IPO).