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Samsung offices raided in BioLogics accounting probe

Prosecutors to weigh questioning senior executives at electronics maker

Investigators have arrested five Samsung group employees in connection with an accounting fraud case at drugmaker Samsung BioLogics.    © Reuters

SEOUL -- South Korean prosecutors descended upon offices belonging to Samsung Electronics on Thursday in an apparent search for evidence of broader involvement in an accounting scandal that has rocked a biopharmaceutical affiliate.

Agents from the Seoul Central District Prosecutors' Office searched a location in Suwon, a city on the outskirts of the nation's capital, and reportedly confiscated documents and hard disk drives related to the Samsung BioLogics case.

The raid included the office of the head of a task force charged with communications within the Samsung group. Prosecutors will likely determine whether to question members of senior Samsung executives based on evidence collected.

The high-profile case hits at the heart of Samsung, the country's largest family-owned chaebol conglomerate, which has seen its share of scandal in recent years.

Samsung BioLogics, a contract drugmaker, is suspected of inflating its 2015 annual earnings by 4.5 trillion won ($3.78 billion). The money-losing unit swung to a profit after revising valuation methods for its stake in subsidiary Samsung Bioepis.

South Korea's Financial Services Commission opened an investigation into Samsung BioLogics in May of last year, and prosecutors initiated a probe the following November. The investigation has resulted in the arrests of two Samsung Electronics vice presidents, two managers from Samsung Bioepis, and one employee at Samsung BioLogics. All are charged with attempting to conceal evidence and other wrongdoing.

The deepening probe comes as the Supreme Court is set to rule on a final appeal over the bribery conviction of the Samsung group's de facto leader, founding family scion Lee Jae-yong.

Grassroots organizations pushing for chaebol reform argue the alleged accounting fraud is connected to a 2015 merger of two Samsung units, which strengthened Lee's grip on the group.

Lee was imprisoned in 2017 for bribing ousted President Park Geun-hye in exchange for support for the merger. After appealing his conviction, Lee was set free this past February with a reduced and suspended sentence.

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