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| Deloitte Anjin's logo |
By Anna J. Park
Following a nine-month investigation, the Seoul Central District Prosecutor's Office indicted three accountants at Deloitte Anjin earlier this week on charges of violating the country's Certified Accountant Act. The law requires chartered accountants to remain impartial and maintain good faith, while prohibiting them from receiving bribes and conspiring with others to generate unfair financial gains.
Prosecutors launched their investigation in April last year after Kyobo Life Insurance accused the accounting firm as well as members of the insurer's investor consortium ―composed of Hong Kong-based Affinity Equity Partners, Baring Private Equity Asia, Singapore's GIO and IMM Private Equity ― of colluding to give the investors unfair benefits in calculating the insurer's fair market value.
The insurer also filed a complaint against Deloitte Anjin with the U.S. Public Company Accounting Oversight Board early last year.
The feud started after the investor consortium acquired a 24.01 percent stake in Kyobo Life back in 2012 for 1.2 trillion won ($970 million), at 245,000 won per share. According to the consortium, the purchase contract included a put option of reselling the acquired shares to Kyobo Life Chairman Shin Chang-jae, in case the insurer failed to complete its initial public offering (IPO) by 2015. After Kyobo Life's IPO was delayed due to deteriorating market conditions, the consortium said it chose to exercise the put option in late 2018 at a price of 409,912 won per share. The share valuation was calculated by Deloitte Anjin. But Kyobo Life argued that the valuation was intentionally calculated at a much higher price for the unfair benefit of the investor consortium.
Prosecutors concluded that the accounting firm unfairly calculated Kyobo Life's fair market value favoring the investor consortium and indicted two officials at the consortium.
"Prosecutors collected evidence showing that a request was made by the investor consortium and that Deloitte benefited from it," an official from the prosecution told a local media outlet.
