SEOUL (The Korea Herald/ANN) – Throughout 2018, a number of iconic business figures in South Korea have found themselves embroiled in legal disputes, some over personal transgressions such as embezzlement and tax evasion and others for being implicated in the wide-ranging scandal surrounding ousted former President Park Geun-hye.
The impact of this headache for the business community has been different for different industries. While accounting firms took a hit as a result of their clients’ noncompliance, large law firms enjoyed moneymaking opportunities as more and more conglomerate chiefs required legal counsels.
Earlier this month, prosecutors raided the offices of KPMG Samjong, Deloitte Anjin, Samil PwC and EY Han Young – the so-called Big Four accounting firms – on the sidelines of their probe into Samsung BioLogics, which was eventually found to have inflated its corporate value and committed accounting fraud.
Two of the four, KPMG Samjong and Deloitte Anjin, had served as auditors for the embattled biopharmaceutical company and faced penalties last month for dereliction of duty.
Samil PwC and EY Han Young, though they had no direct dealings with Samsung BioLogics, were auditors for other related Samsung affiliates.
The Securities and Futures Commission, under the regulator the Financial Services Commission fined KPMG Samjong 178 million, banned the firm from auditing Samsung BioLogics for the next five years, and suspended four of its accountants from practicing their profession.
Deloitte Anjin, which was involved in the corporate evaluation process, was banned from auditing Samsung BioLogics for three years.
Though some progressive civic groups viewed these penalties as too lenient, the outcome was devastating for the two accounting firms, which had already been held liable for other landmark accounting irregularities in recent years.
Deloitte Anjin had only recently recovered from the disgrace of having overlooked shipbuilder Daewoo Shipbuilding & Marine Engineering’s (DSME) multitrillion won accounting fraud. In November, the accounting firm won an administrative suit and succeeded in overturning an earlier business suspension order concerning the DSME case.
But in marked contrast with the struggling accounting sector, leading law firms had much to gain from the legal disputes of chaebol chiefs.
Bae, Kim and Lee – the nation’s second-largest law firm and legal representative for Samsung Electronics Vice Chairman Lee Jae-yong – raked in tens of billions of won in legal fees after the court released the tycoon from detention earlier this year.
Lee had been imprisoned on bribery allegations in connection with the extensive corruption scandal that led to former President Park’s impeachment last year.
Market champion Kim & Chang stands to reap continued profits from a similar bribery case involving high-profile client Lotte Group Chairman Shin Dong-bin.
“It is likely that compliance cases involving corporate chiefs may continue to increase throughout next year, and this is why large law firms are gearing up their marketing efforts recently,” said an industry observer on condition of anonymity.
Some also predicted that the need for stronger corporate compliance will continue to increase in the coming years due to the Fair Trade Commission’s push for conglomerate reform.