Police Conclude Investigation into 'Discovery Incident'... Jang Ha-sung and Kim Sang-jo Not Indicted

16 People Including Jang Ha-won, CEO of Discovery, Referred to Prosecution

Ambassador Jang Ha-sung to China is delivering a greeting at the opening ceremony of the 'Korea-China Ink Painting Exchange Exhibition' commemorating the 14th anniversary of the Korea Cultural Center in China held in May last year. [Image source=Yonhap News]

[Asia Economy Reporter Gong Byung-sun] Former Ambassador to China Jang Ha-sung and former Blue House Policy Chief Kim Sang-jo, who were implicated in allegations of receiving special favors during the escape process amid the Discovery Asset Management redemption suspension incident, have been cleared of charges.

On the 30th, the Financial Crime Investigation Unit of the Seoul Metropolitan Police Agency announced that it had sent 16 people, including Jang Ha-won, CEO of Discovery Asset Management, former IBK Industrial Bank of Korea President Kim Do-jin, and officials from IBK and Hana Bank, to the Seoul Southern District Prosecutors' Office on charges including violation of the Capital Markets Act.

The Discovery incident refers to the 2019 case where a fund worth 256.2 billion KRW managed by Discovery Asset Management suspended redemptions due to circumstances involving a U.S. asset management company. At that time, the U.S. asset management company entered court receivership, causing problems for Discovery Asset Management's fund and leading to large-scale investor losses. The fund was sold for thousands of billions of KRW through IBK, Hana Bank, Korea Investment & Securities, and others.

As victims' appeals continued, the police launched a full-scale investigation in July last year, including imposing a travel ban on CEO Jang and conducting searches and seizures at banks. During the investigation, the police also detected signs that CEO Jang evaded public offering regulations by using a 'fund splitting' method. When private equity funds are split into several parts and sold, funds can be raised from many investors without exceeding 49 investors. If the number of investors exceeds 50, the fund is classified as a public offering fund and is subject to various restrictions.

During the investigation, the police found evidence that Jang's elder brother, former Ambassador to China Jang, and former Policy Chief Kim had invested in the fund. However, the police did not indict individual investors and ultimately decided not to prosecute them.

Meanwhile, the 13th Criminal Division of the Seoul Southern District Court (Presiding Judge Lee Sang-joo) acquitted CEO Jang, who was indicted for selling a faulty fund worth about 100 billion KRW and suspending redemptions. The court explained the reason for the acquittal, stating, "It cannot be reasonably proven beyond a reasonable doubt that there was deception of victims or false statements of important matters in the sale of the fund."

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