Jang Ha-sung, Ambassador to China, Denies Preferential Treatment Allegations: "Did Not Receive Redemption Money from Discovery Fund"

▲Han Fangming, President of the Chahaer Society (left), and Pan Yurong, President of the Beijing Jiangsu Entrepreneurs Association (right), are taking a commemorative photo with Jang Ha-sung, Ambassador of Korea to China (center), on the 4th to mark the delivery of COVID-19 quarantine supplies. (Photo by Kim Jin-pyo's Office)

[Asia Economy Beijing=Special Correspondent Cho Young-shin] Ambassador Jang Ha-sung to China has completely denied allegations that there were preferential treatments related to redemptions during the process of investing over 6 billion won in his and his wife's names in the Discovery Fund, which halted redemptions causing losses of thousands of billions of won. The Discovery Fund was created by Jang's younger brother, Jang Ha-won, CEO of Discovery Asset Management.

On the 10th, Ambassador Jang stated in a position paper delivered to the correspondent group through the embassy's public affairs officer, "Regarding the fund investment that caused the insolvency accident, there was no application for any redemption before or after the accident occurred," adding, "Therefore, there was no receipt of redemption money, and the preferential treatment related to fund redemptions is completely untrue."

He added, "If necessary, I will provide additional explanations and undergo investigations." The day before, Ambassador Jang also released a statement explaining, "After assuming the position of Policy Chief, I lawfully reported my assets reflecting all stock holdings, stock sales, and fund holdings," and expressed regret, saying, "I feel sorry as a high-ranking public official for the controversy caused by the fund operated by my younger brother."

The preferential treatment allegations relate to the fact that unlike ordinary fund victims who invested in 'closed-end funds' that do not allow redemption before maturity, Ambassador Jang and former Policy Chief Kim Sang-jo invested in 'open-end funds' that allow free deposits and withdrawals during the term. The police are investigating whether the 'open-end fund' invested in by Ambassador Jang also incurred losses and whether funds from the 'closed-end fund' were used to compensate for losses in the 'open-end fund.'

The Discovery Fund is a private equity fund that caused about 256.2 billion won in investor losses due to a redemption suspension incident in April 2019. Unlike public funds, which collect money from an unspecified large number of investors, private equity funds raise funds from a small number of investors and invest separately according to specific purposes by asset management companies.

Private equity funds are broadly divided into 'open-end' and 'closed-end' types. If redemption is possible before maturity, it is open-end; if not, it is closed-end. Since closed-end funds have money locked until asset sales, investors generally prefer open-end funds if other conditions are equal.

Ambassador Jang Ha-sung's fund investment came to light from a PC file containing an investor list secured when the police raided the Discovery office in July last year. The file reportedly contained information that Ambassador Jang and his wife invested about 6 billion won in July 2017. It is also known that former Policy Chief Kim Sang-jo invested about 400 million won in July 2017, shortly after assuming the position of Fair Trade Commission Chairman.

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