Oneasia Reignites Ahead of Korea Zinc Extraordinary General Meeting... Will It Affect Voting? [fn Market Watch]

[Financial News] Ahead of Korea Zinc's extraordinary general meeting of shareholders, claims have emerged that Chairman Choi Yun-beom is once again facing a "Oneasia risk." Oneasia Partners, which had previously drawn controversy over massive investment losses and accounting issues, is back in the spotlight after criminal case records revealed a fund flow worth 69 billion won.
According to the investment banking industry on the 25th, Youngpoong and MBK Partners said in recent materials analyzing the agenda for the extraordinary shareholders' meeting that criminal trial records related to the embezzlement case involving Oneasia Partners CEO Ji Chang-bae confirmed a link between the Choi family's personal investments and follow-on investments by the Oneasia fund.
According to Youngpoong and MBK, the Choi family first invested in unlisted entertainment companies unrelated to Korea Zinc's core business, and the Oneasia fund, in which Korea Zinc had invested, later made follow-on investments in the same companies. The targets were three companies: Arc Media, 29 billion won; Hi-Hat, 32 billion won; and Slingshot Studios, 8 billion won. In total, 69 billion won was invested in six rounds.
The key issue in this dispute is not the investment losses themselves, but the sequence of the capital injections. Youngpoong and MBK argue that, since the Korea Zinc-backed fund made large investments after the Choi family's personal investments, the investment decision-making process and any conflict of interest must be examined.
Korea Zinc has previously said that, as a limited partner in the Oneasia investment, it did not take part in individual investment decisions.
Meanwhile, the Oneasia issue has also come under scrutiny in an accounting review by the financial authorities. The Securities and Futures Commission (SFC) sanctioned Korea Zinc this year, saying the company had understated losses from its Oneasia fund investments and other related holdings in its financial statements. However, the claim by Youngpoong and MBK that company funds were used for the Choi family's private benefit has not been confirmed by the financial authorities or the courts.
As the Oneasia issue resurfaces just before the extraordinary meeting, the battle over the appointment of audit committee members is expected to intensify. Youngpoong and MBK are stressing the need to elect independent audit committee members through separate voting, saying the existing board and audit committee failed to provide sufficient checks during the investment process.
An official in the investment banking industry said, "If the earlier Oneasia controversy was about investment losses and accounting issues, this time the focus has shifted to the flow of funds between personal investments and the company-backed fund through criminal records." The official added, "Ahead of the extraordinary meeting, this is likely to lead to a dispute over the board's and audit committee's oversight responsibilities."
Another legal source said, "In the end, the Oneasia controversy appears to have returned as a governance risk for Chairman Choi ahead of the extraordinary meeting." The source added, "How he explains that the personal investments and the Oneasia fund's investment decisions were separate will be the key point to watch in the coming dispute."
[email protected] Kim Kyung-a Reporter