Youngpoong and MBK: "Korea Zinc Fails to Deny Use of Company Funds in Chairman Yoon-Bum Choi's Investments"

Fierce Exchanges With Korea Zinc Ahead of September 9 Shareholders’ Meeting
Allegations Raised Over One Asia Partners Investments
Youngpoong and MBK: "The Core Issue Is Chairman Yoon-Bum Choi’s Pursuit of Personal Interests"

Yongpo and MBK Partners, who are in a management dispute with Choi Yunbum, Chairman of Korea Zinc, are intensifying their offensive ahead of the Korea Zinc shareholder meeting. They criticize the company for failing to clearly clarify allegations that Korea Zinc made follow-up investments in unlisted entertainment and content companies previously invested in by Chairman Choi.

On August 26, Yongpo and MBK pointed out, "Korea Zinc has cited legal actions and claims of 'undetermined information,' but has not denied the core fact that company funds were subsequently invested in unlisted entertainment and content firms in which Choi Yunbum, an inside director at Korea Zinc, and his family had already invested."

Previously, Yongpo and MBK raised suspicions about Chairman Choi's pursuit of private interests based on investigation records from the Seoul Southern District Prosecutors' Office. In response, Korea Zinc immediately issued a statement rebutting that "some content has been selectively extracted and distorted, omitting factual context and sequence" and that "undetermined information has been deliberately manipulated as if it were legally verified fact."

However, Yongpo and MBK reiterated that the main issue is the structure in which Choi's private investments were followed by Korea Zinc funds, and that these suspicions remain unresolved. Representatives of Yongpo and MBK said, "Even during the procedures at the Financial Services Commission’s Securities and Futures Commission, the witness for director Choi Yunbum was unable to deny the existence of this investment structure." They added, "In its position statement on the 25th, Korea Zinc also failed to directly counter any of the following key facts: that Choi made prior investments, that Korea Zinc made large-scale capital contributions to One Asia Partners, that One Asia Partners made follow-up investments in the same firms, and that these companies are entertainment and content firms not related to Korea Zinc’s main business."

One Asia Partners is a private equity fund management company run by Ji Changbae, an elementary and middle school classmate of Chairman Choi. Korea Zinc has invested a total of about 560 billion won in this management company. Of the eight funds, such as Korea Growth No. 1 and Arbitrage No. 1, Korea Zinc was effectively the sole investor in six of them.

Yongpo and MBK stated, "The essence of this case is that One Asia Partners, which is essentially funded by Korea Zinc, made follow-up investments in firms where Choi had previously invested, and as a result, there is a high possibility that these unlisted companies’ corporate value increased, enabling potential private gains for Choi. It is difficult to reasonably accept the explanation that Choi, then CEO of Korea Zinc, was unaware of such a structure."

They further criticized, "This is not a simple investment failure or accounting error, but an alleged case of misappropriation of company funds and breach of trust, in which the investment risk that should have been borne by Choi personally was supported by Korea Zinc and its shareholders’ money. If, as Korea Zinc claims, the company is a victim, then the board of directors and the audit committee should have immediately investigated how the damage occurred, where the money went, who was responsible, and whether Choi was involved or had any conflict of interest. Yet this was not done."

Meanwhile, Korea Zinc plans to hold an extraordinary shareholder meeting on September 9 to elect four additional independent directors and one new member of the audit committee. With the appointment of new directors and independent auditors at stake, a fierce showdown over votes between both sides is expected.

In response, Korea Zinc dismissed the allegations as public opinion warfare aimed at the shareholder meeting. A Korea Zinc representative said, "Korea Zinc is a limited partner (LP) in funds managed by One Asia Partners, and the selection of individual investment targets and investment decisions were independently made by the general partner (GP). Recent results of the securities commission’s review have also clearly confirmed that this was not intentional accounting fraud or illicit private gains by management, but rather a disagreement over accounting judgments such as the timing of asset evaluations and impairment recognition."

This content was produced with the assistance of AI translation services.