At a regular meeting on the 17th, the Financial Services Commission (FSC) finalized the imposition of a penalty surcharge for accounting standard violations by Dongsung Finetec and Well Biotec. This is a follow-up to the Securities and Futures Commission's decision to impose sanctions on the two companies, including a criminal referral and the designation of an auditor.
Dongsung Finetec was hit with a total penalty surcharge of 154.9 million won, including 6.1 million won on the company and 148.8 million won on four people including the CEO. Dongsung Finetec failed to promptly reflect changes to subcontract construction contracts and manipulated the construction progress rate, inflating net income and equity. It also concealed from the auditor the fact that it had agreed to increase the contract amount and outsourcing processing costs, thereby obstructing the external audit.
Well Biotec was imposed a total penalty surcharge of 1.4023 billion won, including 1.0928 billion won on the company and 309.5 million won on three people including the former CEO. Well Biotec sold its own convertible bonds to a related party below market price but did not reflect this as a loss in its accounting books from 2019 to 2022. It also processed a business operated by another company as if it had handled it directly, falsely inflating revenue and expense.
The Financial Services Commission (FSC) also imposed a penalty surcharge of 208.5 million won on Shinhan Accounting Corporation, which handled Well Biotec's external audit, holding it responsible for neglecting audit procedures on key transactions and revenue.