AmorePacific’s ESG rating at risk of being downgraded Korean cosmetics firm’s internal audit revealed its three employees embezzled $2.7 mil

Translated by Ryu Ho-joung 공개 2022-05-20 07:53:33

이 기사는 2022년 05월 20일 07:36 더벨 유료페이지에 표출된 기사입니다.

South Korean cosmetics company AmorePacific is at risk of seeing its environmental, social and governance (ESG) rating cut amid concerns about the company’s internal control mechanism following a multi-million dollar embezzlement scandal.

The company’s internal audit revealed three employees of the sales department embezzled 3.5 billion won ($2.7 million) and used it to gamble and buy stocks and virtual assets, the company said on Tuesday.

AmorePacific fired the three employees as disciplinary action and intends to file a formal complaint against them with police. Most of the embezzled money has been returned, the company said.

“We reported the results of disciplinary action and improvement plans to the board’s audit committee in accordance with the company’s rules and also disclosed the information to all employees,” said an official at AmorePacific.

“We will strengthen our internal control and improve the sales process to make sure this kind of thing never happens again.”

It is likely the embezzlement scandal will negatively affect an ESG rating of AmorePacific, which is rated A by Korea Corporate Governance Service (KCGS).

In January, KCGS cut its ESG rating on Osstem Implant from B to C after 221.5 billion won – equivalent to 90% of the company’s capital – was embezzled by one of its employees. Especially, the dental implant maker’s governance rating was downgraded from B to D.

The money embezzled by AmorePacific’s employees represents 0.07% of its capital of 4.8 trillion won as of the end of March. But its ESG rating could be downgrade if the company’s internal control mechanism is not thought to function reliably.

“We will discuss AmorePacific’s embezzlement scandal during our meeting for a quarterly rating review scheduled for the first week of July to factor that in its governance rating,” a KCGS official said. (Reporting by Nu-ri Moon)
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