Young Poong and MBK: "Korea Zinc Lent Over KRW 30 Billion to Companies Linked to Choi Yunbeom's Closest Associate"

"Recovered using Korea Zinc's contributions"

Young Poong and MBK Partners claimed that a pattern of transactions had taken place in which Korea Zinc supplied tens of billions of won to companies associated with Ji Chang-bae, CEO of One Asia Partners and a figure known to be close to Korea Zinc Chairman Choi Yun-beom, and was repaid with investment funds from a fund backed by Korea Zinc.

Young Poong and MBK said, "We have confirmed that the same pattern of transactions occurred three times: Korea Zinc provided 36.35 billion won to companies associated with CEO Ji by purchasing private bonds and commercial paper (CP), and then received repayment for those bonds using investment funds from a One Asia fund backed by Korea Zinc."

According to Young Poong and MBK, Korea Zinc successively purchased private bonds and CP issued by companies unrelated to its core business between 2019 and 2020. All of the companies were associated with either CEO Ji, a close associate of Chairman Choi Yun-beom, or companies owned by Ji's family.

Young Poong and MBK claim that the flow of funds was identical in all three transactions, with only the target companies and intermediary entities differing. Korea Zinc provided funds by purchasing bonds or CP, and a One Asia fund backed by Korea Zinc invested in the companies or their affiliates. The funds received were then used to repay the bonds or CP held by Korea Zinc.

Young Poong and MBK said, "Although the bonds directly held by Korea Zinc were repaid, the funds used for repayment also came from Korea Zinc's investment, while the fund backed by Korea Zinc remained exposed to the risk of losses resulting from the financial distress of the affiliated companies." They called it "a self-repayment structure in which Korea Zinc used its own money to repay its own bonds." They said this method was used in the purchase of 7 billion won in private bonds issued by cash-strapped Cheongho Comnet, the process by which Ji repurchased KOSDAQ-listed Imagine Asia, and the acquisition of a Cheongho Comnet subsidiary for 20 billion won through a newly established company.

They also claimed that some transactions were unsecured or had collateral that fell far short of covering the principal and interest. Young Poong and MBK said, "According to the relevant records, Korea Zinc finance executives and employees who handled the transactions told investigators that they had proceeded with the bond purchases on orders from their superiors."

A Young Poong and MBK representative said, "Although the target companies and intermediary entities differed, the pattern was identical in all three transactions: Korea Zinc first supplied funds to companies associated with CEO Ji, and then used Korea Zinc's investments in One Asia funds to repay Korea Zinc's own bonds."

The representative added, "Given that the same transaction was repeated three times, it is difficult to view this as a coincidence or as an independent investment decision by the fund manager. The relevant authorities must thoroughly investigate who ordered and approved the transactions, including current inside director Choi Yun-beom, who was Korea Zinc's CEO at the time, and whether proper reviews were conducted of the business prospects, likelihood of recovery, and potential conflicts of interest."

Korea Zinc: "Arbitrary stitching together and baseless allegations" 

Korea Zinc, meanwhile, claimed that after losing a shareholder derivative lawsuit, its critics were making baseless allegations by arbitrarily piecing together information. The company said, "Without reflecting on their excessive litigation campaign, they are repeating their efforts to pressure the company and its management with unverified allegations and a public opinion campaign."

Korea Zinc said it invests some of its surplus funds in various financial products, including funds, for financial investment purposes. It argued that it is practically impossible to track or control how those funds are used after each investment, as they pass through multiple counterparties and entities. It also said that the fund manager, or general partner (GP), takes the lead in selecting specific investments, drawing up investment plans, conducting due diligence, and executing investments.

Korea Zinc also criticized Young Poong and MBK for fitting individual transactions to a predetermined conclusion, saying this did not constitute verification of the objective facts. It added that the allegations were merely a rehash of their repeated public opinion campaigns.

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