Police, 3 Years Since Discovery Allegations Raised... Upper Echelons Remain Unclear

Discovery Fund Investigation Stalled
"Special Privileges Can Only Be Judged After Investigation Ends"
Concerns Over Closure Without Clarification

[Image source=Yonhap News]

[Asia Economy Reporter Seongpil Cho] Nearly three years have passed since allegations of preferential treatment against Ambassador Jang Ha-sung to China related to the 'Discovery Fund Redemption Suspension Incident' were raised, but police investigations are reportedly still sluggish. There are concerns that the investigation may conclude without even approaching the truth behind the 'upper echelon.'

The Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency is investigating the Discovery Fund case, which caused massive damage due to the redemption suspension in April 2019. At a press briefing yesterday, the police stated, "We summoned and questioned Jang Ha-won, CEO of Discovery Asset Management, again last week," adding, "Investigations related to the allegations are ongoing." However, regarding the preferential treatment allegations against Ambassador Jang, the police said, "We need to confirm through investigations of related parties," and "Only after the investigation is complete can we determine whether preferential treatment or related circumstances occurred." This means that the investigation into the so-called upper echelon, which can be seen as a key part of the case, has yet to make progress.

Allegations of preferential treatment against Ambassador Jang surfaced immediately after the fund redemption suspension. Questions arose about the series of events in which a newly established asset management firm's fund was sold by the state-run Industrial Bank of Korea, causing the fund's assets under management to surge, which seemed difficult to accept. Coincidentally, the period when Ambassador Jang served as Chief of the Presidential Office for Policy Coordination overlapped with the period when the Industrial Bank of Korea sold the fund, leading to suspicions that he might have exerted influence. This fund was known as the 'Jang Ha-sung's brother's fund' because Jang Ha-won's brother, Ambassador Jang, was the CEO of the asset management company.

During the police investigation, it was revealed that Ambassador Jang had subscribed to the fund, raising suspicions that he might have received preferential treatment, such as compensation for losses. Earlier, the police conducted raids on 17 locations, including headquarters and sales agencies, and reportedly secured PC files containing the real names and investment amounts of individuals who invested in the fund. The files reportedly included information that Ambassador Jang and his spouse invested about 6 billion KRW over seven years starting shortly after his appointment as Chief of the Presidential Office in July 2017.

Last month, Ambassador Jang denied the allegations, stating, "There is no violation of law, and I have neither applied for redemption nor received redemption payments." However, suspicions have intensified because Ambassador Jang subscribed to the fund in an open-ended form that allowed free deposits and withdrawals, unlike ordinary investors. Victims of the fund are also urging, "Ambassador Jang should disclose the circumstances of his investment in the fund and whether any amount has been recovered." A staff member from an opposition party lawmaker's office on the Political Affairs Committee said, "Given that the CEO is the younger brother of a key figure in the administration, suspicions of exerting influence are inevitable," adding, "Whether preferential treatment was provided must be thoroughly investigated."

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