A war of words is escalating between Korea Zinc's largest shareholders, Young Poong and MBK Partners, and the camp of Korea Zinc Chairman Choi Yun-birm, over allegations that Choi's family pursued private gain at the company's expense.
In a statement on the 26th, Young Poong and MBK said Korea Zinc "has failed to deny the core facts — that Korea Zinc funds were subsequently invested in unlisted entertainment and content firms in which inside director Choi Yun-birm and his family had holdings."
Young Poong and MBK had directly raised the self-dealing allegations against Choi's camp the previous day, drawing on investigation records from the Seoul Southern District Prosecutors' Office. Korea Zinc pushed back the same day, saying in a statement that the group "selectively extracted and stitched together portions of the material while omitting the actual facts and full context," and had "distorted unconfirmed content as if it were established fact backed by legal authority."
Young Poong and MBK countered that "even in the proceedings before the Securities and Futures Commission, the deponent for director Choi Yun-birm's side could not deny the investment structure itself." The group stressed that in its statement on the 25th, Korea Zinc had "failed to directly rebut any of the core facts: the prior investment by director Choi's side, Korea Zinc's large-scale capital injection into One Asia Partners, One Asia Partners' subsequent investments in the firms in question, and the fact that those firms are entertainment and content companies unrelated to Korea Zinc's core business."
The group went on to say that Korea Zinc injected a cumulative total of about 560 billion won ($403 million) into One Asia Partners, then a newly launched private equity fund with no prior investment track record. "One Asia Partners then made subsequent investments of more than about 69 billion won in four unlisted firms unrelated to the core business in which director Choi and his family had holdings, and it is hard to reasonably accept the explanation that director Choi, who was CEO at the time, was unaware of such a structure," it said.
Young Poong and MBK sharpened their criticism, calling it "not a simple investment failure or accounting error, but a suspected case of misuse of corporate funds and breach of trust, in which investment risk that should have been borne by director Choi personally was propped up with the funds of Korea Zinc and its shareholders."
Korea Zinc will hold an extraordinary shareholders' meeting on the 9th of next month. The meeting will elect four additional independent directors and one audit committee member. Young Poong and MBK argue that the newly surfaced self-dealing controversy shows the current audit committee's oversight function is flawed, and that independent audit committee members are needed.
