[At a Crossroads: Listed Companies]② BK Tops CEO Seongnangryong Suspected of Embezzling Company Funds

50 Billion KRW Scrap Metal Sales Deposit Disguised as Debt by CEO Jeong Sang-ryong
Money Also Received in Personal Account... Sued for Fraud Charges
CEO Jeong: "Money Lent to Company Offset as Deposit"

Jung Sang-ryong, CEO of BK Tops.

[Asia Economy Reporter Jang Hyowon] Jeong Sangryong, CEO of BK Tops, which is on the brink of delisting due to a refusal of audit opinion, is accused of embezzling the deposit received under the pretext of selling company assets.

According to the financial investment industry on the 19th, BK Tops signed a consignment sales contract last September with Company A to sell 120,000 tons of scrap metal from an abandoned factory located in Sangju, Gyeongbuk. Under the contract, Company A sells the scrap metal on behalf of BK Tops and takes 15% of the sales as profit.

Earlier, in March last year, BK Tops purchased the former Woongjin Group polysilicon factory in Sangju, Gyeongbuk. The purchase was made to generate profit by disposing of various old machinery and scrap metal inside the factory. The acquisition cost of the scrap metal was about 33.3 billion KRW. According to company officials, the current market value reaches 50 billion KRW.

CEO Jeong signed the scrap disposal contract with Company A and received a deposit of 5 billion KRW. Of this amount, 2 billion KRW was received not by BK Tops but by BK One, a wholly owned subsidiary. While selling BK Tops' assets, the money was received by BK One. BK One is currently undergoing liquidation procedures.

Although the scrap disposal contract was signed, the scrap metal was not transferred to Company A. According to Company A, CEO Jeong claimed to have obtained permission from Meritz Securities to remove the scrap metal but said that due to lack of demolition costs, the factory could not be dismantled and demanded additional demolition expenses.

BK Tops initially raised funds for acquiring the scrap metal by issuing convertible bonds (CB). During this process, all the scrap metal was pledged as collateral for the CB. The collateral holder is Meritz Securities. Without Meritz Securities' approval, the scrap metal cannot be removed.

Company A sent an additional 3 billion KRW under the name of demolition costs. CEO Jeong received this money into a personal account instead of BK Tops' account. Nevertheless, Company A did not receive the scrap metal and eventually filed a criminal complaint against CEO Jeong for fraud in July.

Furthermore, there is evidence that CEO Jeong disguised the 5 billion KRW deposit received from Company A as his own money. The 5 billion KRW paid by Company A as a deposit is recorded as advance payments in the accounting books of BK Tops and BK One. Before fulfilling the contract, it is a debt of BK Tops and BK One. The creditor of the deposit is Company A.

CEO Jeong changed this deposit into his own claim. He arranged it by signing a claim transfer contract with Company A to receive the deposit claim. He converted the money put in by Company A into money he put in himself. However, Company A denies having signed such a contract.

Regarding this, CEO Jeong stated, "I offset the Company A deposit with money I lent to BK Tops and BK One." However, he did not disclose account details related to the money lent. He also did not comment on the authenticity of the claim transfer contract made with Company A.