"[Exclusive] Circumstances Suggesting a Close Relationship Between Korea ...

Choi Yun-beom (left), chairman of Korea Zinc, and Jang Hyung-jin, adviser to Young Poong, who are engaged in a management control dispute over Korea Zinc. Photo = Yonhap News.

| Newswatch=Reporter Kim Jae-chang | From 2019 to 2023, Korea Zinc invested as much as 560 billion won in funds managed by One Asia Partners, a newly established private equity firm with little track record at the time. The sizable investment into a fledgling firm sparked widespread speculation that it was a “relationship-based investment.”

This was largely because One Asia Partners Chairman Ji Chang-bae and Korea Zinc Chairman Choi Yun-beom were elementary school classmates at Kyunggi Elementary School. In particular, six out of the eight funds managed by One Asia were effectively sole-investor funds, with Korea Zinc holding more than a 96% stake in each. Korea Zinc has yet to recover even the principal amount of the investment.

Chairman Ji, who was born in 1975 and is the same age as Chairman Choi, is known for maintaining close relationships not only with Choi but also with second- and third-generation owner-managers of other major conglomerates.

Young Poong, which is currently engaged in a management control dispute with Korea Zinc, argued that “although an enormous sum of 560 billion won was invested, basic procedures such as board reporting and risk review were absent,” adding that “company funds were effectively managed at the personal discretion of the chairman.”

In response, Korea Zinc countered that “all investments and capital contributions were executed transparently in accordance with internal delegation rules and relevant laws, and there were absolutely no legal violations.”

In October last year, the Seoul Southern District Court, in its ruling on Chairman Ji’s alleged embezzlement and breach of trust charges, stated that “the investors in the affected funds were not ordinary retail investors, but a small number of professional investors with special relationships to the defendant.” The court further wrote that “it is clearly a factor to be taken into account that no substantial damage had occurred to the affected funds, nor had the investors raised issues leading to the initiation of the investigation.”

Young Poong interpreted the ruling as “an indirect acknowledgment by the court that the investments were not part of ordinary asset management practices, but rather opaque investments made on the basis of personal relationships.”

A photo posted on Ji Chang-bae’s Facebook account in 2017 shows a comment from Ms. Lee, the wife of Choi Yun-beom, saying, “Chang-bae, you look great ^^,” to which Chairman Ji replied, “Thank you.” Photo = Captured from Chairman Ji’s Facebook account.

Amid the controversy, a Facebook post suggesting a personal relationship between Chairman Choi’s wife, identified only by her surname Lee, and Chairman Ji was also discovered. According to a 2017 post on Chairman Ji’s Facebook account, Lee commented, “Chang-bae, you look great ^^” on a photo of Ji driving while wearing sunglasses. Ji replied, “Thank you.”

The post was uploaded in 2017, two years before Korea Zinc began investing in One Asia, suggesting that Lee and Ji were already acquainted to some extent at the time. In addition, Chairman Choi, Lee, and Chairman Ji are connected as Facebook friends.

An industry insider commented, “It would be excessive to link the allegations of relationship-based investment in One Asia solely on the basis of social media connections, photos, and comments,” but added that “it could be viewed as circumstantial evidence showing that their relationship extended beyond being elementary school classmates into adulthood.”

In response, Korea Zinc stated, “We are not fully aware of matters related to Chairman Choi’s personal life, and even if we were, it would be difficult to comment,” adding, “Although Young Poong and others claim this was a relationship-based investment, all procedures were carried out lawfully.”

Meanwhile, the Investigation Bureau 4 of the Seoul Regional Tax Office recently launched a special tax investigation into Korea Zinc. According to reports, the National Tax Service is examining the background behind Chairman Choi’s large-scale investments in One Asia.

At the end of last month, the Korea Zinc Minority Shareholders Alliance filed complaints with the Seoul Central District Prosecutors’ Office against the company’s outside directors over the One Asia fund investment, while also submitting a petition to the Financial Services Commission.

The group stated, “This issue is not merely about investment losses, but one that could affect the credibility of the disclosure system for listed companies and the overall order of the capital market,” adding that “investigative authorities and financial regulators should each conduct thorough investigations and verification in accordance with their respective roles.”

They further emphasized, “We do not want Korea Zinc’s corporate value to be damaged,” and added, “It is a fundamental principle of the capital market for shareholders to question corporate decision-making and demand explanations from the board of directors and management.”

Reporter Kim Jae-chang newswatch@newswatch.kr