Former and Current Directors of SMC Also Accused
“Purchasing Stocks for Personal Gain is Embezzlement”
[Edaily Reporter Kim Eun-kyung] On the 3rd, Young Poong, the largest shareholder of Korea Zinc, filed charges against Choi Yoon-bum, Chairman of Korea Zinc, and the former and current directors of its wholly-owned Australian subsidiary, Sun Metal Corporation (SMC), with the prosecution.
Young Poong and MBK Partners announced that they reported Choi, Korea Zinc’s President Park Gi-deok, SMC’s CEO Lee Seong-chae, and SMC’s CFO Choi Joo-won to the Seoul Southern District Prosecutor’s Office on charges of breach of trust and violating the Fair Trade Act under the Act on the Aggravated Punishment of Specific Economic Crimes.
A representative of Young Poong and MBK claimed, “Chairman Choi Yoon-bum engaged in unprecedented illegal activities by creating an illicit capital structure to maintain his position, seriously damaging shareholder rights and the order of the capital market.”
Previously, Young Poong and MBK had reported the four individuals to the Fair Trade Commission, accusing them of evading the prohibition of cross-shareholding under the Fair Trade Act. This was after they were suspected of intentionally forming a new cross-shareholding arrangement to restrict Young Poong’s voting rights at Korea Zinc’s extraordinary shareholders’ meeting, where Young Poong and MBK’s board takeover was almost certain.
The charges with the prosecution also include embezzlement claims, alleging that Chairman Choi utilized SMC, a subsidiary of Korea Zinc, for his personal gain and expended corporate funds.
Young Poong and MBK cited Supreme Court precedents to argue, “If the parent company’s affiliate purchases stocks of another company without an apparent business necessity, merely for the personal gain of the parent company’s chairman, it constitutes breach of trust.”
SMC spent 57.5 billion KRW to purchase Young Poong shares, but this did not bring any business advantages. Meanwhile, Chairman Choi used SMC’s public funds privately to prevent the entry of Young Poong and MBK’s recommended candidates into the board during Korea Zinc’s temporary shareholders’ meeting, thus maintaining his control—indicating a conflict between SMC’s interests and Chairman Choi’s personal interests.
Chairman Choi is also under investigation by institutions such as the Seoul Central District Prosecutor’s Office and the Seoul Southern District Prosecutor’s Office for a total of four cases related to alleged crimes, including embezzlement through One Asia Partners funding and Ignio Holdings investment, fraudulent transactions through false statements in public tender offer reports during general public offering processes, and involvement in manipulating SM Entertainment’s stock prices through One Asia Partners investment (violation of the Capital Market Act).
A Young Poong and MBK spokesperson commented, “Chairman Choi and his accomplices harm the interests of shareholders and general investors for the benefit of one person—Chairman Choi—and indiscriminately exploit Korea Zinc’s funds as if they were a personal piggy bank, without hesitating to commit any illegal act. Given the seriousness of the crimes and the risk of evidence destruction, it is crucial for the prosecution to conduct a swift and rigorous investigation to ensure the rule of law is upheld, leaving a mark on the capital market and society.”