Celltrion headquarters in Songdo, Incheon. (Park Hyun-koo/The Korea Herald)
South Korea’s leading drugmaker Celltrion saw its shares rise Monday after financial authorities had decided not to press charges for accounting fraud as long as the company pays fines, names an independent oversight board and removes the executives responsible.
On Friday, the Financial Services Commission said Celltrion, Celltrion Pharm, and Celltrion Healthcare -- three listed firms that respectively develop anticancer drugs, make biopharmaceuticals, and distribute the products -- had overstated revenues and inventory and skipped reporting key stock transactions.
But although it was a case of “gross negligence,” it was “not intentional,” the top financial policymaker said, ending a four-year investigation that effectively prevented a trading suspension as well as prosecution for all three companies. Intentional wrongdoing carries criminal liability accompanying usually heavier punishment.
In 2018, the fraud allegations were brought up to the Financial Supervisory Service, a nongovernment oversight body helping the top financial policymaker. The FSS found the companies all guilty and handed over the case to the FSC.
Analysts said the final verdict would push up the stock held back by years of uncertainty.
“The drugmaker is finally off the hook and a rebound is on the way. The market speculation over a potential merger between the three companies runs high and that could prove to be a driving force for the uptrend. We’ll have to see,” said Heo Hye-min, an analyst at Kiwoom Securities.
Celltrion, whose founder and honorary chairman said two years ago that he would seek to consolidate the three firms, released a statement saying that the group accepts the final ruling, though it noted infractions the investigation found were a matter of interpreting the rules.
On Monday, Celltrion shares on the Kospi closed at 180,500 won ($145) up 4.34 percent from Friday’s closing, while Kosdaq firms Celltrion Pharm and Celltrion Healthcare traded at 99,300 won and 70,000 won, up 6.09 percent and 5.11 percent, respectively from Friday’s session.
By Choi Si-young (firstname.lastname@example.org