Supreme Court acquits Kolon Life Science executives over Invossa false-data charges

By Choi Eui-jong, The Herald Business

The Supreme Court has finalized acquittals for Kolon Life Science executives charged with submitting falsified documents to obtain approval for Invossa-K, a treatment for osteoarthritis. One executive, however, was found guilty on a separate bribery charge and received a final fine.

The Supreme Court's Second Division, presided over by Justice Eom Sang-pil, on Thursday upheld a lower court's not-guilty verdict for a former head of Kolon Life Science's biotech new drug research institute, identified only as A. He had faced charges of obstruction of official duties by deception, fraud under the Act on the Aggravated Punishment of Specific Economic Crimes, violation of the Subsidy Management Act, and violation of the Pharmaceutical Affairs Act.

A former head of the company's medical team, identified as B, who stood trial on the same charges, was also acquitted on all of those counts. However, the lower court's guilty finding on a bribery charge against B was upheld, making final a fine of 10 million won ($6,500).

The court said it found no error in the lower court's reasoning — no violation of the rules of logic and experience, no departure from the limits of free evaluation of evidence, and no misapplication of law.

A and B are accused of deleting experimental results or submitting falsified data to the Ministry of Food and Drug Safety as if they were accurate between 2016 and 2017, out of concern that Invossa's manufacturing and sales approval could be denied or delayed, thereby obstructing ministry officials' duties through deception.

They also face charges of defrauding officials and evaluators at the National Research Foundation of Korea and the Korea Health Industry Development Institute by submitting preliminary project proposals containing misleading language — including references to "US Phase 3 trial approval" — and fraudulently obtaining research and development subsidies.

B, who handled regulatory affairs with the Ministry of Food and Drug Safety, also faces charges of asking ministry officials to smooth over problems arising during the clinical approval and product licensing process, and providing them with meals, indoor golf sessions and other entertainment in return.

In 2021, the first-instance court acquitted both A and B on charges of obstruction of official duties by deception, fraud under the specific economic crimes act, violation of the subsidy management law, and violation of the Pharmaceutical Affairs Act. B was found guilty only on the bribery charge and fined 5 million won.

The first-instance court declined to find B and others guilty of obstructing official duties, reasoning that the Ministry of Food and Drug Safety bore a basic obligation to verify submitted materials and had not exercised sufficient care as the licensing body. The court found it difficult to conclude that the ministry had conducted a thorough review in gathering the relevant information.

On the fraud and subsidy law charges, the court found it similarly difficult to conclude that the use of misleading language such as "US Phase 3 trial approval" had been proven to have materially influenced the funding decisions, and acquitted on those counts as well.

On the charge of providing entertainment to ministry officials, the court said the conduct "could not be treated lightly regardless of the amount involved, as it risked compromising the impartiality of public officials' duties and undermining public trust by infringing on the incorruptibility of official acts." Nevertheless, it found it difficult to conclude that the intent was to obtain preferential treatment in the product licensing process, and imposed a fine of 5 million won.

In 2023, the appellate court overturned the first-instance ruling on the bribery charge, found B guilty, and raised the fine from 5 million won to 10 million won. It dismissed the prosecution's appeal on all remaining charges, leaving the lower court's findings intact.