Security & Fraud

Samsung Execs Jailed In South Korea For Evidence Tampering

A South Korean court slapped three Samsung Electronics executives with jail sentences Monday (Dec. 9) for evidence tampering during an accounting fraud investigation, Reuters reported.

Prosecutors said computers and servers from Samsung Biologics, a contract drug manufacturer, were buried beneath factory floors to conceal evidence.

A Samsung Electronics vice president was sentenced to two years behind bars. Two company task force presidents were sentenced to 18 months, according to Yonhap News Agency.

“Destroying and hiding evidence in a group-wide move regarding the accounting fraud case that was an issue the public took interest in is not a light crime,” the court said, according to Yonhap. “The methods for concealment, which are difficult for an average person to imagine, also shocked society.”

The court further said that the people of South Korea want to see Samsung “become the world’s best company and contribute to the national economy.” 

That kind of growth won’t be encouraged if law and procedure are not followed, Judge Soh Byung-seok said. “If it is growth backed by foul play and cheating, it will not be endorsed.”

“The boldness of the defendants’ criminal acts was beyond the public’s imagination and stunned society,” the judge said.

Prosecutors are still investigating alleged accounting fraud and this ruling is the first.

Prosecutors started looking into suspected fraud at Samsung Biologics after the Financial Services Commission (NFS) — South Korea’s financial watchdog — said the firm’s value in 2015 was exaggerated by 4.5 trillion won ($3.82 billion).

Monday’s sentences came amid a corruption scandal that has entangled Samsung Vice Chairman Jay Y. Lee and South Korea’s former president, Park Geun-hye. Geun-hye was sentenced to 25 years in jail for working with her friend Choi Soon-sil to defraud conglomerates of billions in Korean won. Lee was charged with bribing Park for support in succession planning at Samsung.

The accounting fraud probe came about in July 2018, when South Korean financial regulators said Samsung Biologics intentionally breached corporate accounting rules in regards to its joint venture with Biogen.


New PYMNTS Report: Preventing Financial Crimes Playbook – July 2020 

Call it the great tug-of-war. Fraudsters are teaming up to form elaborate rings that work in sync to launch account takeovers. Chris Tremont, EVP at Radius Bank, tells PYMNTS that financial institutions (FIs) can beat such highly organized fraudsters at their own game. In the July 2020 Preventing Financial Crimes Playbook, Tremont lays out how.