Police have begun tracking down an employee of Osstem Implant, the nation's largest dental implant maker, who is suspected of embezzling 188 billion won ($157 million) in corporate funds. The money is equivalent to 92 percent of the company's equity capital and nearly twice its operating profit in 2020. It would be the single largest embezzlement case that ever hit a listed firm here.
The embezzled money allegedly had been channeled through multiple bank accounts in divided amounts before the case came to light Monday. The employee, identified only by his surname Lee, may have already fled the country with some amount of money. Lee, who was in charge of managing corporate funds, invested much of the money in stocks while allocating some in his personal accounts.
After the embezzlement was discovered, the Korea Exchange indefinitely suspended trading of Osstem shares listed on the tech-heavy KOSDAQ market. Osstem said that the employee in question embezzled the funds by forging balance certificates and other documents, but it's doubtful how such a huge amount of corporate funds could have been stolen from a company with a market capitalization of nearly 2 trillion won. What is more alarming is that the company had been kept in the dark for months while its funds were being embezzled. There is the possibility of collusion by some within the company, but Osstem ruled out this possibility. Certainly, the police should investigate this case extensively.
The embezzlement case is a vivid example of how lax our internal control system of listed firms is. Major shareholders should be responsible for wrongly electing top management, but minority shareholders are at a loss for words hopelessly amid delisting concerns. Otherwise, Osstem's stock price could plummet while trading is suspended for a long time. To restore market confidence, it's imperative to ramp up the surveillance of accounting systems in listed companies. If incidents of this kind recur, the specter of the “Korea discount” could return to haunt the nation.