MBK Partners: "Choi Yoon-beom, Chairman of Korea Zinc, Undermines Board Functions"

"Koryo Zinc Board of Directors Rendered Powerless"

[Image source=Yonhap News]

MBK Partners stated on the 21st, "Chairman Choi Yoon-beom incapacitated the board of directors, the fundamental decision-making body of the corporation, and the function of the Korea Zinc board has been severely compromised."

On the same day, MBK Partners released a statement asserting, "If the Korea Zinc board had functioned properly, investments such as the 560 billion KRW contribution to One Asia Partners, the investment used for market manipulation of SM Entertainment, and the 580 billion KRW acquisition of Ignio Holdings, which is in a state of complete capital erosion, would have been unthinkable." They added, "Among Korea Zinc’s outside directors is a professor from K University who previously served as an outside director at Cheongho Comnet, operated by Ji Chang-bae, CEO of One Asia Partners. Therefore, a healthy check on Chairman Choi cannot be expected."

MBK Partners cited Chairman Choi’s unilateral investment of approximately 560 billion KRW in the One Asia Partners fund, the Habana No.1 investment directly used for SM Entertainment market manipulation, and the 580 billion KRW investment in Ignio Holdings, an electronic waste recycling company in a state of complete capital erosion, as evidence of the compromised function of the Korea Zinc board.

According to MBK Partners, Chairman Choi invested about 560 billion KRW of Korea Zinc funds into One Asia Partners, operated by Ji Chang-bae, a middle school classmate, without board approval. This amount is approximately 1.4 times the total annual labor cost (salary and welfare expenses) of Korea Zinc, which is 376.2 billion KRW.

One Asia Partners is a newly established fund that was founded on June 3, 2019, just three months after Chairman Choi took office as CEO on March 22, 2019. Over 80-90% of the capital contributions to the eight funds operated by One Asia Partners were paid by Korea Zinc. As of the end of June 2024, Korea Zinc’s total estimated loss from investments in One Asia Partners stands at 137.8 billion KRW (-24.8%). Habana No.1, in which about 100 billion KRW of Korea Zinc funds were invested (holding 99.8% of Korea Zinc shares), is currently under criminal trial for allegations of high-price stock purchases and market manipulation of SM Entertainment shares. Chairman Choi was reported to the Seoul Southern District Prosecutors’ Office last year on charges of violating the Capital Markets Act, embezzlement, and breach of trust.

MBK Partners stated, "During the acquisition of Ignio Holdings, which is in a state of complete capital erosion, for about 580 billion KRW (more than 200 times its 2021 sales of 2.9 billion KRW), the Korea Zinc board was incapacitated and failed to function properly." They added, "Detailed valuation information or reports regarding Ignio Holdings were not provided to the board, and requests for investment reports by advisor Jang Hyung-jin of Youngpoong and the Youngpoong side were ignored."