Hanmi Pharmaceutical is facing the possibility of an extended special audit into its 100 billion KRW (about 75 million USD) uncollected receivables from its Beijing subsidiary, potentially continuing until year-end. While the company aims to conclude by month’s end, experts suggest that verifying the receivables’ origins and collection efforts may require additional time. Concurrently, Chief Executive Officer (CEO) Hwang Sang-yeon’s investment history and Mirae Asset connections are under renewed scrutiny.
Industry sources revealed on October 24 that the Hanmi Pharmaceutical Audit Committee’s special audit of Beijing Hanmi might conclude later than the initially planned October end. The need for thorough verification of long-standing receivables and recovery actions necessitates this extended timeline.
100 Billion KRW in Uncollected Receivables: CEO Hwang Reports Commitment to Additional Repayments
The special audit was initiated to investigate Beijing Hanmi’s failure to collect receivables from Chinese distributor Runmeikang. These receivables ballooned from 35.1 billion KRW (about 26.5 million USD) at the end of 2022 to 125.4 billion KRW (about 94.6 million USD) by last year’s end, with 108.4 billion KRW (about 81.8 million USD) still outstanding as of June 30 this year. Runmeikang is affiliated with the COREE Group, effectively controlled by Chairman Lim Jong-yun.
On October 8, the Hanmi Pharmaceutical Audit Committee launched the special audit, engaging Samil Accounting Corporation and law firm Sejong. The audit focuses on transaction structures, receivables generation, and collection processes. While the audit’s independence has been praised, the effectiveness of collection measures remains a critical concern.
Collection efforts since Hwang’s appointment are under close examination. The audit may be influenced by the need to assess management’s response to long-standing receivables, recent repayments, and the viability of future recovery plans.
Hwang reported receiving partial repayments from Runmeikang between late September and early October, with indications of further repayments in Q4. However, he noted that no specific repayment schedule has been confirmed.
Business transactions can’t rely on mere intentions, Hwang stated, indicating that stronger measures are being considered. Despite repayment intentions, actual collection remains uncertain. The effectiveness of Hwang’s strategies will be judged by future collection outcomes.
Spotlight on Mirae Asset Alumni in Management; COREE Group Investment Allegations Surface
The special audit has reignited interest in the backgrounds of key Hanmi Group executives. Chairman Choi Hyun-man of Hanmi Science, CEO Hwang, and Chief Risk Officer (CRO) Ahn Jong-kyun all have Mirae Asset backgrounds, highlighting the prevalence of financial sector professionals in top management.
Recent allegations suggest Hwang, while at a previous investment firm, considered a 50 billion KRW (about 37.8 million USD) investment proposal for the COREE Group. This has sparked renewed interest in his investment history and current role, especially given the ongoing audit into receivables from COREE Group-related entities.
Hwang clarified that the alleged COREE Group investment review never progressed to a formal stage. It was merely preliminary information from a consultant, he stated, emphasizing that no significant effort was devoted to the investment review.
Regarding his relationship with Chairman Choi, Hwang noted minimal direct work interactions during their Mirae Asset tenure. He also denied receiving an introduction from Choi when joining Hanmi Pharmaceutical. Hwang stated he has only met Hanyang Precision Chairman Shin Dong-guk at board meetings, stressing his neutrality as a professional manager and prioritization of company interests.
Hwang explained that CRO Ahn’s hiring was driven by the need to bolster risk management, particularly in light of the Beijing Hanmi issue. He detailed that Ahn, with extensive CRO experience at Mirae Asset, was recruited through an internal interview process, noting they had no significant prior professional relationship.