Fund CEO Convicted of Embezzlement in 560 Billion Won Investment... Korea Zinc Denies "Personal Ties Investment"

Ji Changbae, CEO of One Asia Partners, sentenced to three years in prison
Classmate ties between Chairman Yoonbum Choi and CEO Ji raise "crony investment" suspicion
Korea Zinc refutes, claiming "Impossible for LP to monitor individual GP actions"

Ji Changbae, CEO of One Asia Partners, in which Yoonbum Choi, Chairman of Korea Zinc, decided to invest over 500 billion won, has been convicted in court on charges of misappropriating fund assets. Observers point out that Korea Zinc's decision to invest a large sum in an asset management company run by CEO Ji, who is a middle school classmate of Chairman Choi and has little prior investment track record, could once again become a major issue.

On the 23rd, Youngpoong, the largest shareholder of Korea Zinc, stated, "This verdict reveals not only a simple investment failure, but also the moral hazard and collapse of internal controls under Chairman Yoonbum Choi's leadership." On the 21st, the 15th Criminal Division of the Seoul Southern District Court sentenced CEO Ji to three years in prison, suspended for four years, for violating the Act on the Aggravated Punishment of Specific Economic Crimes (embezzlement) after finding him guilty of using fund assets for personal purposes.

According to legal sources, the court found that "the investors in the affected fund were not ordinary investors and had a special relationship with the defendant." This suggests that the One Asia Partners fund was a "special relationship fund" composed of individuals with personal ties to Chairman Choi. Chairman Choi and CEO Ji were classmates in elementary and middle school. The court thus recognized in its ruling that Korea Zinc's investment in One Asia Partners was not a typical corporate asset management decision, but rather "money entrusted to a friend."

In fact, Korea Zinc invested a total of 560 billion won in One Asia Partners, a newly established private equity fund founded in 2019, from 2019-immediately after Yoonbum Choi became CEO-through 2023. It is reported that there were no procedures such as board reporting, risk assessment, or external due diligence during this process. Korea Zinc has not yet recovered its principal investment. The court also stated that "the investigation was not initiated due to concerns raised by the investors."

This can be interpreted as an indication that Korea Zinc was aware of CEO Ji's misappropriation of fund assets but did not take legal action and overlooked the situation. According to the investment banking industry, in reality, funds with a single LP (Limited Partner) receive detailed investment reports from the GP (General Partner), making it fully possible to detect any irregularities in the flow of funds.

Among the eight funds managed by One Asia Partners, Korea Zinc held a 96.7% stake in six of them, effectively making it a single LP. Youngpoong stated, "The fact that CEO Ji was convicted of misappropriating fund assets shows that Korea Zinc's compliance system was effectively nonfunctional," adding, "With internal oversight functions paralyzed, several hundred billion won of company funds were managed at the sole discretion of the chairman."

In response, Korea Zinc refuted that Youngpoong and MBK arbitrarily interpreted and distorted the court's verdict. The company asserted that all investments and contributions to funds and other financial products were executed according to internal delegation and approval regulations and relevant laws. Korea Zinc explained, "The operational department responsible for managing surplus funds conducted its own liquidity and profitability reviews and proceeded with related investments based on reasonable and normal judgments," and added, "Under the fund structure, it is the exclusive authority and responsibility of the GP to independently manage and execute the contributed capital, and the LP cannot be aware of the actions of specific individuals belonging to the GP."

Yoonbum Choi, Chairman of Korea Zinc, is speaking at the Korea Zinc press conference held on the 13th at the Korea Chamber of Commerce and Industry in Jung-gu, Seoul. On the right is Kideok Park, CEO. Chairman Choi stated, "I will step down as chairman of the board as soon as possible and have an outside director take over as chairman of the Korea Zinc board." Photo by Hyunmin Kim

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