Kang Se-chan, the Genencell CEO at the center of drug lobbying allegations involving Justice Minister nominee Kim Seung-won, has been accused of ties to a suspected corporate raider group.
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 EM&I, a KOSDAQ-listed company, in his capacity as CEO of Embiome Therapeutics, a company he founded after Genencell.
EM&I, which faces the threat of delisting, was the target of an attempted management takeover involving outside parties. In May this year, the company's minority shareholders proposed removing eight existing directors, including CEO Ko Chang-hoon, along with the auditor, and appointing the same number of new directors and an auditor. EM&I develops materials for organic light-emitting diodes (OLED), yet Kang, whose career has been in the pharmaceutical industry, was named as a candidate despite having no apparent connection to the business. Beyond that, some of the individuals recommended by the minority shareholders are said to be suspected corporate raiders or stock manipulators.
One outside director candidate nominated by the minority shareholders, identified as A, formerly served as CEO of Signal Entertainment. Signal Entertainment was taken over through a leveraged, largely self-financed scheme by a group of corporate raiders who then manipulated its share price, and the company was eventually delisted. Prosecutors indicted and detained the CEO and an inside director at the time over the case. A was deeply involved in running the company, serving as its president overseeing China operations.
The auditor candidate, identified as B, formerly served as CEO of Cyworld Z. That company attracted numerous investments on a pledge to revive Cyworld but became mired in disputes over the recovery of investment funds and asset transfers. Other candidates have also appeared as directors on multiple occasions during EM&I's management disputes.
The current management has repeatedly raised concerns about corporate raiding. In shareholder letters released in January and May this year, Ko said, "Considering the past records of some candidates, there are concerns that they could have a negative impact on the company's continued growth and shareholder value." Regarding some of the suspected individuals, he said, "These people also triggered a management dispute two years ago, which contributed to a decline in the company's operating profit, and their intent to seize management control by creating a dispute is deeply concerning." The attempt to replace the directors failed after being voted down at the shareholders meeting, but the company suffered serious internal damage during the dispute and has since begun the process of selling management control.
Kang, however, has flatly denied the allegations, saying he never made any improper requests in connection with the Genencell lobbying case or other matters. A political source said, "There are suspicions that the experience of a successful lobbying effort through the nominee Kim may have led to another case of corporate raiding."
Meanwhile, according to data obtained from the Ministry of Food and Drug Safety by the office of Rep. Yoon Sang-hyun of the People Power Party, a COVID-19 treatment candidate developed by Genencell while Kang served as its CEO was administered to 93 subjects in domestic clinical trials. Problems had emerged in the company's own animal testing, including the deaths of hamsters, but the company concealed those findings and obtained clinical trial approval. Jang Dong-hyuk, leader of the People Power Party, said, "The lives of citizens were nearly put at risk."
