Invested in Fund with Prior Knowledge of Stock Price Manipulation, Says Youngpoong
Korea Zinc Responds: "No Mention in Emails... Pure Investment, Claims Are Distorted"
Choi Yunbeom, chairman of Korea Zinc, is drinking water at the Korea Zinc press conference held at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul, on the 13th. On the same day, Chairman Choi stated, "I will step down from the position of chairman of the board as soon as possible and have an outside director take over as chairman of the Korea Zinc board." Photo by Kim Hyunmin
Youngpoong, the largest shareholder of Korea Zinc, has raised suspicions of collusion by Choi Yunbeom, chairman of Korea Zinc, in connection with the SM Entertainment stock manipulation case. Youngpoong claims there is sufficient evidence indicating that Choi was aware, even before the fund was established, that the investment would be used to purchase SM Entertainment shares.
On September 5, Youngpoong asserted, "There is evidence that Chairman Choi Yunbeom and the Korea Zinc management were aware in advance that the capital invested in the Havana No. 1 Fund would be used to purchase SM Entertainment shares," adding, "This contradicts Korea Zinc's explanation that it was merely an investor in the fund and was not involved in the fund's investment decisions."
Youngpoong pointed out that indications of Korea Zinc's collusion in SM Entertainment stock price manipulation were confirmed in internal Korea Zinc emails disclosed in court. Youngpoong maintains that if the company recognized the flow of funds used to artificially influence the stock price and still proceeded with the investment and approval, this constitutes either 'collusion' or 'abetment.'
Youngpoong further stated, "Chairman Choi Yunbeom's side claimed that the investment related to SM Entertainment's stock price manipulation was a legitimate fund investment and that there was no violation of the law, but this is not true," adding, "Korea Zinc's investment should be seen as having been made with prior knowledge of the stock price manipulation, and since the funds were actually used for the manipulation, there is a potential violation of the two relevant provisions of the Capital Markets Act."
Invested 100 billion won in a middle school classmate's fund... Dissolved after one year
Previously, in February 2023, Korea Zinc was the sole investor, contributing approximately 100 billion won to One Asia Partners' Havana No. 1 private equity fund, which was reportedly used in the SM Entertainment stock manipulation scheme. One Asia Partners was a private equity management company with no notable track record, and its CEO, Ji Changbae, was a middle school classmate of Chairman Choi Yunbeom.
The funds invested by Korea Zinc on February 15, 2023, were immediately used for large-scale purchases of SM Entertainment shares on February 16 and 17 of the same month. According to testimony from a Kakao Entertainment executive, in March 2023, right after Kakao blocked HYBE's tender offer for SM Entertainment, Chairman Choi Yunbeom and Chairman Kim Beomsoo met, during which Choi reportedly said, "Congratulations to Bae Jaehyun, former head of Kakao's investment division, for achieving such an excellent result this time. Let's continue to cooperate well with each other, even if indirectly, in the future."
Later, in April of the same year, Korea Zinc received a cash distribution of 52 billion won from the Havana No. 1 Fund. In December, the company reportedly received an in-kind dividend of about 440,000 SM Entertainment shares, worth approximately 40 billion won. The fund was resolved in January 2024 and liquidated in March. Youngpoong stated, "Korea Zinc recovered half of its investment in just two months, received direct in-kind distribution of SM Entertainment shares, and liquidated the fund early after a year and a half. This is clear evidence that Korea Zinc was the source of the key funds used in the SM Entertainment stock manipulation scheme."
Korea Zinc: "Claims are false and intentionally distorted"
On the other hand, Korea Zinc refuted Youngpoong's allegations, stating, "Youngpoong is intentionally distorting facts that are not true."
In a statement released the same day, Korea Zinc said, "Korea Zinc never received any prior report or information about the alleged purpose of blocking the tender offer, as claimed by the other party," adding, "Even the contents of the email cited by Youngpoong in their press release make no mention of this, and in fact, serve as evidence supporting our innocence."
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