Measures Following Investigation and Audit Results on Business Reports
On the 29th, the Financial Services Commission announced that it has finalized a fine of approximately 1.5 billion KRW against Osstem Implant for preparing financial statements in violation of accounting standards.
At its 10th meeting, the FSC resolved to impose fines on seven companies including Osstem Implant, their related parties, and auditors for preparing and disclosing financial statements in violation of accounting treatment standards, pursuant to the Act on External Audit of Stock Companies.
The total fine imposed on Osstem Implant amounts to 1,492.9 million KRW. In September 2020, Osstem Implant incurred some losses from trading stocks using company funds but failed to account for this properly. The former head of the finance team, Mr. Lee, embezzled company funds for personal stock trading but accounted for it as cash and cash equivalents. Mr. Lee was indicted on charges of embezzlement under the Act on the Aggravated Punishment of Specific Economic Crimes and violation of the Act on the Regulation and Punishment of Criminal Proceeds Concealment, and was sentenced to 35 years in prison in the second trial.
Additionally, the FSC imposed a fine of 996.4 million KRW on SBW Life Science and 84.4 million KRW on the company’s former CEO. The company failed to recognize impairment losses on investments in subsidiaries, resulting in overstated or understated net income and equity. Furthermore, it was found that the company omitted liability recognition despite having entered into an agreement with a specific overseas subsidiary’s trading partner to make substitute payments for accounts payable to that partner.
Other fines resolved include: Jiranjigyo Security 115.8 million KRW and 23 million KRW for two former CEOs; Pantech C&I Engineering 32.9 million KRW; SKN Pulse 360 million KRW and 72 million KRW for two former CEOs; CN Plus 283.5 million KRW and 56.6 million KRW for former CEOs, and 120 million KRW for Jung Myung Accounting Corporation; Pinotech 73.1 million KRW and 14.6 million KRW for two CEOs, and 52 million KRW for Daehyun Accounting Corporation.
Measures such as auditor designation for these companies have been separately resolved by the Securities and Futures Commission.
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