This sequence of events had ignited suspicions from the local media and some politicians that Samsung received business favors in exchange for donating 20.4 billion won to two foundations formed by President Park Geun-hye’s confidante Choi Soon-sil, the figure at the center of the country’s roiling political scandal.

The chairman of the Korea Exchange, Chung Chan-woo, is scheduled to appear as a witness at the upcoming hearing to answer questions over whether the KRX altered its listing requirements in order to help the Samsung subsidiary raise funds by going public.

Chung was summoned by Rep. Park Young-sun of the main opposition Democratic Party of Korea, who had interrogated Samsung Electronics Vice Chairman Lee Jae-yong on this issue during last week’s hearing.

At the time, the lawmaker accused Samsung of receiving multiple favors from the government in exchange for its donations — including the state-run National Pension Service’s support for a controversial merger between Samsung C&T Corp. and Cheil Industries as well as eased IPO regulations for Samsung BioLogics, a subsidiary of Samsung C&T.

“Samsung BioLogics is a company that has never made a profit. Its questionable public listing was made possible through preferential treatment,” Rep. Park said. “Has there ever been a case in which an unprofitable company has been listed in Korea?”

The Samsung chief responded that “no favors were involved,” adding, “from what I know, we actually tried to pursue a public listing abroad, but the KRX actually approached us first.”

Earlier this month, Samsung BioLogics had denied the existence of any dubious state-business ties regarding its IPO in a public announcement on its website.

“Samsung BioLogics completed all of the relevant listing procedures in accordance with established rules and principle,” the firm said.

“Although we initially considered a Nasdaq listing, we picked the Kospi as our final IPO venue in consideration of persistent persuasion by the Korea Exchange, the revised listing regulations as well as public expectations,” Samsung BioLogics said.

The KRX also stated that the bourse operator actively persuaded Samsung BioLogics to go public on the Kospi, instead of the Nasdaq, as part of standard efforts to boost investment.

“We decided to revise our listing requirement in November last year in order to recognize the diverse achievements of promising companies with high-growth potential,” the KRX said, pointing to more flexible listing requirements devised by foreign stock markets.

Despite the company’s reasoning, shares of Samsung BioLogics have been continuously falling over the past few weeks, partly due to the recent political suspicions as well as massive short-selling by foreign investors last week.

Samsung BioLogics shares stood at 145,000 won as of last Friday, losing more than 10.22 percent from a closing price of 161,500 won on Nov. 28, the day that local reports alleging the company’s ties to the Choi scandal broke out.

Founded in 2011, Samsung BioLogics produces biologic drugs on behalf of global pharmaceutical giants such as Bristol-Myers Squibb and Roche. The company, which is currently in the red, posted a revenue of 91.2 billion won and an operating loss of 203.6 billion won in 2015.

The contract drug manufacturer has pointed out that it will swing into the black once its second and third plants begin commercial operations. For now, Samsung BioLogics’ first plant, the smallest of the three, is producing commercial biologics.

By Sohn Ji-young (jys@heraldcorp.com)