Deloitte Anjin accountants indicted for colluding to inflate Kyobo's pre-IPO value

In January 2021, after a nine-month investigation, the Seoul Central District Prosecutor's Office indicted three Deloitte Anjin accountants and two financial investors for breaching Korea's accounting laws — allegedly colluding to distort Kyobo Life Insurance's estimated pre-IPO stock price. Kyobo had accused the accounting firm in April 2020 of 'unfairly and insincerely' valuing the insurer at the request of a consortium led by Affinity Equity Partners, Kyobo's second-largest shareholder, which had bought a 24.01 per cent stake in 2012 for 1.2 trillion won.

The dispute turned on a put option signed in 2012: if Kyobo failed to go public by the end of 2015, the consortium could withdraw its capital. After Kyobo delayed the IPO, the investors urged chairman Shin Chang-jae to buy back their shares at 409,000 won per share; Shin argued the price should be 200,000 to 300,000 won. The consortium teamed up with Deloitte Anjin to back its demand — a price Kyobo considered excessive.

Kyobo said its decision not to go public reflected 'unfavourable market circumstances' — super-low interest rates and pending insurance regulation — and called the indictment a 'new milestone' against unfair accounting practices. Affinity countered that Kyobo had met the quantitative IPO requirements, and claimed the real reason Shin avoided listing was that new shares would dilute his management control. Both sides rejected the other's account.

The consortium commissioned a valuation to support its 409,000-won buyback demand, making the auditor's independence in a adversarial price negotiation the central question.

Prosecutors concluded the accountants and investors colluded to distort the estimated stock price — an alleged breach of accounting law, not just a difference of opinion.

Kyobo's IPO delay gave the put option its trigger, but the insurer argued the delay was a market judgement, leaving the valuation fight to decide the exit price.

The criminal route — indictment rather than a civil valuation dispute — reflected how far the alleged collusion went beyond ordinary advisory work.

A valuation in a shareholder dispute is advocacy unless tested: when the auditor works for the price, the number stops being an estimate and becomes evidence.

The indictment was announced on January 20, 2021. A Kyobo spokesperson said the company's position remained unwavering that the investors overvalued the estimated stock price after Kyobo decided against listing on the agreed timeline; an Affinity official maintained Kyobo had fulfilled the legal requirements for an IPO and avoided it to protect the chairman's control. The source article does not report the trial's outcome.