Young Poong, MBK: "Choi Yoon-beom enlisted associates for early investment... 'preplanned breach of trust'"

One Asia Partners fund's investment in Arcmedia
Funds deployed after associates participated in capital increase
"Used public company funds as leverage for private investment gains"

Young Poong and MBK Partners have raised allegations that Korea Zinc Chairman Choi Yoon-beom used company funds to benefit his associates’ private interests during investments in an unlisted company.

On October 12, Young Poong and MBK said, “Specific accounting records and documents have revealed evidence that the alleged early investment in an unlisted entertainment company by Chairman Choi was a ‘carefully planned embezzlement-of-corporate-opportunities transaction for private gain’: the route through which company funds would be invested was identified in advance, and Chairman Choi and his associates had acquired stakes beforehand.”

The two companies said that, during the two months in which Choi made an early investment in the unlisted drama production company Arcmedia and KRW 25 billion in Korea Zinc funds was invested, “seven members of his inner circle,” including people close to Choi, participated in a third-party allotment of new shares and secured stakes in Arcmedia in advance. They also said that one of the seven was appointed the following year as an outside director of Korea Zinc and a member of its audit committee. “Strong criticism is being voiced that this went beyond simple private gain and even neutralized and privatized the internal control system, which should monitor and check the top executives,” they said.

Young Poong and MBK claimed that the investment was carried out by keeping Korea Zinc funds in an account for a One Asia Partners fund, then injecting the prepared company funds after Choi and his associates had first secured stakes for themselves. In particular, they raised questions about the period after Korea Zinc invested in the One Asia Partners fund, when the money was not immediately deployed. They said that, after Choi purchased Arcmedia convertible bonds, his acquaintances secured stakes in Arcmedia’s rights issue, and Ji Chang-bae, CEO of One Asia Partners, took office as an inside director of Arcmedia, the fund’s money was then used to purchase Arcmedia convertible bonds. Young Poong and MBK said, “Korea Zinc funds amounting to dozens of times the paid-in capital were poured all at once into a newly established company with no track record that had started with paid-in capital of just KRW 100 million and had been established only two months earlier.”

The two companies described this flow of funds as a classic case of “positioning oneself at the choke point” and a preplanned breach of trust using undisclosed information. This is because, when a private equity fund manager receives capital contributions from investors, the money is generally remitted to the investment target within three to four days at the latest.

A representative of Young Poong and MBK said, “There would be no reason for Choi Yoon-beom, then CEO of Korea Zinc, and his key associates to line up to secure stakes in a month-old drama production startup with no track record unless they had known with complete certainty in advance that the company’s value would rise after KRW 25 billion, including Korea Zinc funds, was invested.” The representative added, “This was a classic, preferential breach-of-trust transaction and an example of moral hazard: using public company funds as leverage for private investment gains, giving himself and members of his inner circle with whom he has special relationships the opportunity to reap enormous capital gains, and even attempting to neutralize oversight.”

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