Hannuri Law Firm Seeking Legal Action for Osstem Implant Embezzlement Case

   Hit. 306
Date. 2022.01.10   


On January 3rd 2022, Osstem Implant (KOSDAQ 048260) publicly announced that an employee (surname “Lee”) embezzled 188 billion KRW ($156 million) from the company. Korea Exchange(“KRX”) made trading halt order right after the announcement. Osstem Implant is subject to a substantive review of listing eligibility. The KRX initial decision is expected to be announced by 24th of this month. Even if Osstem Implant evades delisting, nearly 20,000 minority shareholders are destined to suffer damages from trade suspension and drop in stock price. 

 

The company asserts that this is an individual corruption incident. However, there is high possibility that primary cause is the company’s flaws in internal control and accounting transparency. Numerous press releases point out the embezzlement is likely to have taken place in 3rd quarter last year. Presumably, Mr. Lee transferred stolen money to his private account in September 2021. In light of the scale of the embezzled money, Mr. Lee’s misconduct could have started far before. 

 

According to the company’s disclosure at DART system of Financial Supervisory Service, Samdeok Accounting Firm made “unqualified opinion” for Osstem Implant’s internal control system in 2020 fiscal year auditor’s report. It is possible that auditor’s report overlooked the company lacking rational internal control system. Furthermore, the company’s CEO Mr. Um stated in 2021. 11. 15. quarterly report that “CEO and directors in charge directly reviewed/certified that the report does not contain false or omission in material fact’, and ‘verify that the company manage internal control system abiding by Act on External Audit of Stock Company’. Nevertheless, Osstem Implant have been cutting internal audit personnel in half and reduced 40% of its audit fee while switching to a new external auditor. 

 

Depending on more facts to be disclosed, the investors/shareholders of the company may bring ① a class action over Osstem Implant’s materially false business report and quarterly report, ② joint actions over damages done by trading halt, or ③ a derivative lawsuit against directors of the company. 

Hannuri Law firm will further analyze facts being revealed, seeking diverse legal actions to protect and recover minority shareholders’ interest.  If you are one of shareholders of Osstem Implant sufferig from this trade suspension, please visit the website of Hannuri Law firm.