Hot Issues in Finance... What Are the 'Lime Unyong' and 'Optimus' Scandals?

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[Asia Economy Reporter Park Jihwan] The private equity fund scandal, with a redemption suspension scale reaching 6 trillion won, has emerged as a major issue in the financial sector’s national audit. In particular, suspicions related to Lime and Optimus, which show signs of escalating into a 'power-type gate' incident, are being intensively addressed, drawing attention from both the financial and political sectors.

On the 12th, the National Assembly’s Financial Services Committee began the financial supervisory authorities’ audit starting with the Financial Services Commission in the morning, proceeding to audits of financial and supervisory authorities and major financial institutions. In this audit, issues such as incomplete sales by banks and securities firms surrounding the successive private equity fund scandals from Lime Asset Management last year to Optimus Fund this year, as well as the financial authorities’ responsibility for supervisory failures, are expected to be intensively questioned.

Private Equity Funds (PEF) refer to funds that manage capital collected from a small number of investors by investing in stocks, bonds, etc. Unlike general funds managed by financial institutions, they take the form of a 'private contract' between individuals. Unlike public funds, they are hardly monitored by supervisory authorities, allowing for relatively unrestricted and free management. Private equity funds typically recruit investors privately and invest in undervalued companies, then increase the corporate value and resell the shares as an operating strategy.

Looking closely at the Lime Asset Management and Optimus fund scandals, they resemble each other in many ways. Both incidents originated from asset management companies. Commonly, they are accused of investment fraud by investing in bad assets contrary to prior agreements made with investors during the private equity fund management process, causing significant losses.

The Lime Asset Management scandal involved the management company hiding poor management while gathering funds from investors and investing in loan companies or insolvent firms, leading to redemption suspension. In the case of Optimus, investors were deceived by promises to invest in safe public institution-issued construction project receivables, resulting in large damages. Investors entrusted their funds based on explanations that they would invest in safe assets and receive an annual interest rate of around 3%. The damage scale reached 1.6 trillion won for Lime and 500 billion won for Optimus.

The reason private equity funds could gather vast amounts of money from investors was primarily due to returns. In the era of virtually zero interest rates, investors wanted to earn even slightly higher returns. Private equity fund managers cleverly exploited this psychology. They promoted their funds as if there was no risk of principal loss, similar to deposits, and attracted investments by offering higher returns than bank interest rates.

Recently, the Lime and Optimus scandals have expanded beyond simple fund fraud cases to become 'political gates' involving names of ruling party figures.

On the 8th, Kim Bonghyun, former chairman of Star Mobility and known as the behind-the-scenes money handler of Lime Asset Management, claimed in court, "In July last year, I handed 50 million won to Kang Giseong, then Senior Secretary for Political Affairs at the Blue House, through Lee Gangse, CEO of Star Mobility."

Regarding the Optimus fund case, internal documents reportedly contain the real names of about 20 figures from the Democratic Party and political and government circles. Allegations have been raised that former Prosecutor General Chae Dongwook met with Gyeonggi Province Governor Lee Jae-myung to request permits and approvals. In response, former Prosecutor General Chae stated, "It is true that I met Governor Lee Jae-myung, but we never discussed business," and Governor Lee also denied, saying, "I have never received any inquiries or requests."

The day before, Kim Eunhye, spokesperson for the People Power Party, said in a statement, "A former Blue House Senior Secretary for Political Affairs appeared in the Lime scandal," and criticized, "The shadow of a 'power-type gate,' where the president’s close aides and regime power brokers privatize power for personal gain, looms large."

This content was produced with the assistance of AI translation services.