[Alpha Biz= Kim Jisun] South Korea’s Financial Services Commission (FSC) announced on December 17 that it has decided to impose administrative fines on Well Biotech Co., Ltd. (010600) for preparing and disclosing financial statements in violation of accounting standards.
According to the FSC, Well Biotech sold self-issued convertible bonds to related parties and others at prices below fair value between 2019 and 2022, but failed to recognize the resulting losses and omitted the transactions from disclosures on related parties.
In addition, although business operations and decision-making related to its meat processing business were carried out by a third party rather than the company itself, Well Biotech accounted for the business as if it were directly operating it, falsely recognizing related revenue.
The company also obstructed the external audit process by submitting false inventory custody confirmations to its auditor.
The FSC imposed an administrative fine of KRW 1.0928 billion on Well Biotech, along with a total of KRW 309.5 million in fines on the company’s former CEO and responsible executives.
The company and three individuals, including the former CEO, were referred to prosecutors, while a former finance executive was notified to the prosecution. The FSC also issued disciplinary measures equivalent to a recommendation for dismissal against three former executives and ordered the designation of an external auditor for a three-year period.
Shinhan Accounting Corporation, Well Biotech’s former auditor, was fined KRW 283.5 million for negligence in audit procedures. The firm was also barred from providing audit services to Well Biotech for three years, while affiliated certified public accountants were subject to suspensions of duties and a one-year ban on auditing listed companies.
Separately, the FSC also sanctioned Dongsung Finetec Co., Ltd. (033500) for accounting violations related to construction contracts in 2022 and 2023. The company failed to timely reflect contract changes in its accounting, resulting in the overstatement of net income and shareholders’ equity, and weaknesses were identified in its internal control over financial reporting.
Dongsung Finetec concealed agreements to increase contract amounts and subcontracting costs from its auditor, thereby obstructing the normal external audit process.
The FSC imposed a fine of KRW 6.1 million on the company and a total of KRW 148.8 million in fines on the former CEO and four responsible individuals.
The company and three individuals, including the former CEO, were referred to prosecutors. The FSC also recommended the dismissal of the executive in charge of sales and imposed a six-month suspension of duties, along with the designation of an external auditor for a three-year period.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
