MBK: "Chairman Choi Yoon-beom Does Not Pass Personal Expenses to Korea Zinc"

Youngpoong and MBK Partners claimed on the 17th that "Chairman Choi Yoon-beom of Korea Zinc is continuously misappropriating company funds to defend his personal control rights."

On the same day, Youngpoong-MBK issued a press release stating, "Amid the Fair Trade Commission's announcement to review Chairman Choi Yoon-beom's illegal capital structure creation involving Korea Zinc's Australian company, Sun Metal Corporation (hereinafter, SMC), the ongoing misappropriation of company funds for Chairman Choi's personal control defense is exacerbating the seriousness of the issue."

Youngpoong-MBK cited Korea Zinc's preliminary consolidated earnings announcement for Q4 last year released on the 5th, explaining, "Despite SMC turning to a deficit due to large-scale labor costs, Chairman Choi Yoon-beom exhausted 57.5 billion KRW of SMC funds to acquire Youngpoong shares to create a capital structure limiting Youngpoong's voting rights." They also claimed, "Recently, it was revealed that Korea Zinc's commission payments in Q3 last year increased about threefold compared to the previous quarter, raising suspicions that Chairman Choi's personal expenses for maintaining control rights were paid using company funds."

In this regard, on the 14th, Youngpoong-MBK, representing shareholders, submitted an audit request letter to Korea Zinc's Audit Committee demanding a thorough verification of "the reasons for the sharp increase in commission payments in Q3 last year and the accuracy of Korea Zinc's accounting figures related to the increase in operating losses in Q4." They also submitted a request letter to the external audit firm of Korea Zinc for the 2024 fiscal year, asking them to "include in the audit report whether any costs attributable to Chairman Choi Yoon-beom personally or related executives and directors for defending control rights were improperly charged to the company."

A Youngpoong-MBK official warned, "The Supreme Court has recognized the establishment of embezzlement charges in a case where a CEO issued illegal new shares to defend management rights and the company paid the CEO's legal fees with company funds. Recklessly misappropriating company funds for Chairman Choi Yoon-beom's personal control defense constitutes embezzlement in the course of duty, and outside directors who failed to monitor this may also bear legal responsibility for breaching their duty of oversight."