Kim Seung-won, the nominee for justice minister who faces allegations of lobbying for approval of a clinical trial for a new drug, has been hit with an additional criminal complaint accusing him of violating the Capital Markets Act.
Lee Jong-bae, a former Seoul city council member from the People Power Party, filed the complaint with the Seoul Metropolitan Police Agency on the morning of Sept. 14 against Kim, a broker surnamed Yang and Genencell founder surnamed Kang, who is suspected of soliciting the clinical trial approval.
Lee argued that Kang's request to Yang — asking Yang to use political connections to secure swift approval on the grounds that an investment had been arranged on the condition that the clinical trial be approved — amounts to "fraudulent unfair trading" under Article 178, Paragraph 1, Item 1 of the Financial Investment Services and Capital Markets Act.
"Yang contacted the nominee several times, telling the nominee things like '30 billion won in investment has been secured' and 'we are preparing for a listing,' and asked him to help with the approval. The nominee then contacted the head of the Ministry of Food and Drug Safety at the time, named Genencell specifically and asked for expedited handling," Lee said. "The approval was actually granted on Oct. 26, 2021." Lee added that Yang's offer of future election support to the nominee as an inducement for the approval request — an attempt to mobilize political influence — constitutes "unfair means" under the Capital Markets Act.
Lee also said the nominee "was aware that the approval could have an enormous impact on Genencell's corporate value and share price, to the point of remarking that if the clinical trial were approved, the company could 'make hundreds of billions of won.'" He further alleged that Kim had been told by Yang that funds raised after Kang sold his existing shares could help with Kim's own election campaign.
"He recognized that the clinical trial approval was such significant favorable news that it would generate hundreds of billions of won in economic gain, and he was even given an explanation of the transaction structure under which the largest shareholder would sell existing shares just before that approval and convert them into cash," Lee said. "As a former judge, Kim cannot but be seen as having recognized, at least through willful blindness, the possibility that such a transaction was not an ordinary stock trade but an illegal and improper one exploiting the clinical trial approval."
