Kang Se-chan, head of Genencell and a central figure in the alleged drug lobbying scandal surrounding Justice Minister nominee Kim Seung-won, has been accused of ties to a suspected corporate raiding group. Genencell's aggressive push for clinical trials previously led to stock price manipulation and a corporate raid at investor Sejong Medical, inflicting losses on small shareholders — raising concerns that similar damage could recur.
According to investment industry and political sources on the 14th, Kang was listed as one of the new outside director candidates proposed by minority shareholders of KOSDAQ-listed ENMI, in his capacity as head of Enbiome Therapeutics, a company he founded after Genencell.
The company, which faces the risk of delisting, has been the target of an attempted management takeover involving outside parties. In May, its minority shareholders proposed removing eight incumbent directors, including CEO Ko Chang-hoon, along with the auditor, and appointing the same number of new directors and an auditor. ENMI develops materials for organic light-emitting diodes (OLED), yet Kang, whose career has been in the pharmaceutical sector, was named as a candidate despite having no apparent connection to the business.
Industry observers believe some of the individuals recommended by the minority shareholders are suspected corporate raiders or stock manipulators.
One of the outside director candidates nominated by the minority shareholders, identified as A, is a former head of Signal Entertainment. That company was acquired without capital by a group of corporate raiders who manipulated its share price, and it was ultimately delisted. Prosecutors indicted and detained the then-CEO and inside directors over the case. A was deeply involved in running the company at the time, serving as chief operating president and overseeing its China business.
B, a candidate for auditor, is a former head of Cyworld Z. That company attracted numerous investments on a pledge to revive Cyworld but became embroiled in disputes over the recovery of investment funds and the transfer of assets. Among the other candidates, several have appeared repeatedly as directors during ENMI's management control disputes.
For these reasons, the current management has raised concerns about corporate raiding on multiple occasions. In shareholder letters released in January and May, Ko said that "considering the past records of some of the candidates, there are concerns that they could have a negative impact on the company's sustained growth and shareholder value." Referring to some of the suspect figures, he said: "These individuals also triggered a management control dispute two years ago, which weighed on the company's operating profit, and their intent to seize management control by provoking disputes is deeply troubling."
The attempt to replace the directors failed after being voted down at the shareholder meeting, but the company suffered serious internal damage during the dispute and has entered a process to sell management control. It now also faces the prospect of delisting.
Industry observers view it with suspicion that Kang has surfaced in another management control dispute following the series of stock manipulation and corporate raiding attempts involving Genencell and Sejong Medical. Kang, however, has flatly denied the allegations, saying he made no improper solicitations in connection with the Genencell lobbying case. A political source said, "There is suspicion that the experience of a 'successful lobbying' effort through the nominee led to another corporate raid."
