"'Discovery Fund' Jang Ha-sung... Summon Decision to Be Made Through Investigation (Comprehensive)"

원본보기 아이콘

[Asia Economy Reporter Cho Sung-pil] The police have stated that they will conduct an investigation as necessary regarding Jang Ha-sung, the ambassador to China, who is known to have invested in the private equity fund 'Discovery Fund,' which caused damages worth approximately 250 billion KRW.

At a briefing on the 14th, the Seoul Metropolitan Police Agency responded to questions about summoning Ambassador Jang by saying, "Our official position is that we cannot confirm," but also indicated their intention to investigate as needed. The police added, "We are focusing our investigation on whether fraud occurred, including when problems arose while managing the Discovery Fund, which was suspended during redemption," and emphasized, "This is something that must be determined through the investigation."

The Discovery Fund was created by Jang Ha-won, the younger brother of Ambassador Jang and CEO of Discovery Asset Management. In April 2019, a suspension of redemptions occurred, resulting in significant investor losses. It is known that Ambassador Jang invested about 6 billion KRW under his own and his family's names. Consequently, suspicions have been raised regarding Ambassador Jang's involvement in the fund's growth process.

In this context, the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency summoned and questioned CEO Jang, the ambassador's brother, on the 9th and 11th. When asked about the handling of CEO Jang's custody, the police stated, "Further investigation is needed," and added, "This will be decided at the final stage."

Unlike public funds, which collect money from an unspecified large number of investors, private equity funds raise capital from a small number of investors and invest separately according to specific purposes by asset management companies. Ambassador Jang and others are known to have invested in an 'open-ended fund,' which allows free deposits and withdrawals during the investment period. The police said, "Whether there was preferential treatment regarding the open-ended nature will be determined through future investigations."

Earlier, the police began a preliminary investigation into this case in early last year. In July, they imposed a travel ban on CEO Jang and conducted raids on 17 locations, including the sales companies Industrial Bank of Korea, Hana Bank, Korea Investment & Securities, and Hana Financial Investment, initiating a formal investigation. During this process, the police reportedly secured PC files containing the real names and investment amounts of individuals who invested in the fund. These files reportedly included evidence that former Blue House Policy Chief Kim Sang-jo invested about 400 million KRW, in addition to Ambassador Jang. However, the police reiterated on this day, "It is difficult to confirm the investment amounts or specific channels," and added, "We are conducting an investigation into whether there was preferential treatment regarding the open-ended fund."

When asked whether the damages were concentrated in the open-ended fund, which allows free deposits and withdrawals, the police avoided a direct answer. They said, "We can only say that most people who invested in the open-ended fund suffered losses." When asked if there were some redemption groups among those who invested in the open-ended fund, they responded, "We will only say that most experienced losses."

Nevertheless, the police drew a line by stating that the handling of custody does not change depending on whether preferential treatment of the open-ended fund existed. The police said, "The key point in this investigation is not whether preferential treatment existed for the open-ended fund," and explained, "The crucial issue is related to the fraud that occurred while managing the fund that was suspended during redemption, including when the fundraising took place."

© The Asia Business Daily(www.asiae.co.kr). All rights reserved.