SK ecoplant is facing the possibility of a severe penalty from financial authorities. The main allegation is that it inflated sales and operating profits of its U.S. subsidiary to boost its value during the initial public offering (IPO) process.
According to financial authorities on the 21st, the Audit Committee, which is a professional advisory body for accounting under the Financial Services Commission, will hold a meeting on the 24th to discuss the results of the audit on SK ecoplant.
The Audit Committee is hosting the review in two sessions due to the large volume of materials that need to be examined regarding SK ecoplant. The first session was held last week, and the second session will be held this week.
SK ecoplant is accused of inflating the sales of its U.S. fuel cell subsidiary, Company A, during the IPO process. The Financial Supervisory Service reported that the consolidated financial statements were falsely prepared and disclosed, noting that there was an incentive to increase corporate value during the IPO preparation process.
The Financial Supervisory Service previously determined that SK ecoplant violated accounting standards intentionally during the IPO process. Accounting violations are categorized as 'intentional', 'gross negligence', and 'negligence', with intentional violations resulting in criminal complaints and the dismissal of executives. The Financial Supervisory Service decided to pursue a criminal complaint against SK ecoplant, dismiss its former CEO, and impose a penalty surcharge amounting to hundreds of millions of won through the audit.
However, SK ecoplant maintains that its accounting treatment for the U.S. subsidiary was conducted under the review of an accounting firm, claiming that the accounting treatment is unrelated to the IPO.
The results of the Financial Supervisory Service's audit will be finalized after passing through the Audit Committee and the Securities and Futures Commission. Some forecasts suggest that SK ecoplant may face severe penalties.
On the 9th, the Financial Services Commission announced an enhancement of sanctions against unfair trading such as stock price manipulation, stating that accounting fraud would also be heavily sanctioned.
Lee Yoon-soo, a permanent member of the Securities and Futures Commission, noted at the time, 'We will impose penalty surcharges at a level that brings 'ruin' on management who deliberately committed accounting fraud.'
However, there remains the possibility that the decision could be influenced by Lee Jae-yong, the chairman of Samsung Electronics, receiving a not guilty verdict from the Supreme Court in relation to the criminal trial concerning the Samsung Biologics accounting fraud allegations. Unlike the Financial Supervisory Service, which regarded the motivation for violating regulations about Kakao Mobility's revenue inflation allegations as 'intentional' at the end of last year, the Securities and Futures Commission concluded it as lower-level 'gross negligence.'