Minority investors filed a criminal complaint on May 15 against three former outside directors over the 580 billion won acquisition
Korea Zinc CI
The Korea Zinc Minority Shareholders Alliance said on May 21 that it filed a criminal complaint with prosecutors on May 15 against three outside directors serving at the time — Seong Yong-rak, Lee Min-ho, and Kim Eui-hwan — on charges of breach of trust under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes and violation of the duty of due care under the Commercial Act. The complaint is aimed at determining the propriety of the decision-making process in Korea Zinc’s acquisition of Igneo Holdings, valued at about 580 billion won ($426.30 million).
Shareholders are taking issue with what they describe as a rushed acquisition of Igneo Holdings without sufficient prior review. As massive investment losses materialized after the takeover, doubts have persisted in the market over whether the board at the time properly examined the validity of the investment.
The shareholder side that submitted the complaint made clear that outside directors must not remain mere “rubber stamps.” They criticized the directors for neglecting their legal responsibility to monitor management’s decision-making and protect shareholder value.
A representative of the shareholder alliance said, “For mergers and acquisitions involving funds worth hundreds of billions of won, transparency and shareholder protection must come first,” adding, “A thorough investigation by prosecutors is needed into the board’s decision-making process at the time and the adequacy of external valuation materials.” The alliance also argued that, as a series of investment controversies surrounding Korea Zinc — including the One Asia Partners investment — continue, the responsibility of board members cannot be treated as an exception.
Key issues in the investigation are expected to include securing transparency in the investment judgment process, identifying how the losses occurred, and determining whether the board’s monitoring system functioned properly. Following the complaint, minority shareholders plan to continue calling on financial authorities and related agencies for further fact-finding and investigations into those responsible.
Korea Zinc is currently facing mounting pressure over the Igneo Holdings acquisition as controversy continues over the validity of the investment and the appropriateness of fund management, amid an ongoing management control dispute. Industry attention is focused on the case, as the prosecution’s findings are expected to determine whether the board members at the time bear legal responsibility.
Jung Min-hee
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