A South Korean court has ordered Korea Zinc to submit documents related to funds operated by One Asia Partners, a private equity firm in which the company invested. Korea Zinc has invested in multiple funds managed by One Asia Partners, with some of the fund capital flowing into Chungho Comnet, a KOSPI-listed company effectively controlled by relatives of One Asia Partners CEO Ji Chang-bae. Young Poong and MBK Partners, Korea Zinc's largest shareholders, are scrutinizing the relationship between Korea Zinc Chairman Choi Yun-birm and Ji.
According to legal sources on Thursday, the 29th Civil Division of the Seoul Central District Court ordered Korea Zinc to submit internal documents related to One Asia Partners' "Korea Growth No. 1" and "Arbitrage No. 1" funds. According to regulatory filings, Korea Zinc holds a 94.64% stake in Korea Growth No. 1 and a 54.59% stake in Arbitrage No. 1. Choi and Ji are former elementary and middle school classmates.
Young Poong and MBK are examining the possibility that the personal relationship between Choi and Ji may have been a factor behind the fund investments. Korea Zinc's investment in the Korea Growth No. 1 fund came shortly after Chairman Choi acquired a stake in Chungho Comnet through a private investment association called "Jericho No. 1." Chungho Comnet, which manufactures cash dispensing machines, has Chungho Enterprise as its largest shareholder, with Ji and his mother holding most of that company's shares.
Ji was found guilty of charges including transferring Korea Growth No. 1 fund capital to an external corporation and then lending it to Chungho Enterprise. The court at the time ruled that Ji had misappropriated the Korea Growth No. 1 funds to repay Chungho Comnet's borrowings.
"It must be confirmed what review and approval process was undertaken for capital execution in the funds where Korea Zinc effectively participated as the largest and sole investor, and how the company received reports on and managed the operational status after the investments," a Young Poong and MBK official said. "The connection structure between One Asia Partners fund investments and transactions related to Chungho Comnet must also be clarified."
