Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Scandal linked to ex-first lady expands to financial, corporate figures
Former first lady Kim Keon Hee, left, and former President Yoon Suk Yeol wait in line to cast their votes for the presidential election at a polling station in southern Seoul, June 3. Joint Press Corp
By Lee Yeon-woo
Special counsel investigates suspicious investments linked to Kim Keon Hee's confidant
Scandals linked to former first lady Kim Keon Hee are spreading through financial and business circles, as the special counsel team accelerates its investigation into suspicious investments tied to her confidant, industry officials said Friday.
The focus of the investigation is to uncover the circumstances surrounding the 2023 investment in IMS Mobility — a rental car company founded by Kim Ye-seong. He reportedly maintained a close relationship with the former presidential couple and was referred to as the first lady's "butler."
The special counsel is examining whether certain firms provided 18.4 billion won ($13.2 million) in funding to IMS Mobility in an effort to manage ongoing criminal cases or mitigate risks associated with their owners.
The latest round of questioning took place on Thursday. The team, led by prosecutor Min Joong-ki, summoned former Korea Securities Finance Corp. Chairman Yoon Chang-ho and former Daou Kiwoom Group Chairman Kim Ik-rae. Both were questioned as reference witnesses.
Korea Securities Finance Corp. and Kiwoom Securities invested 5 billion won and 1 billion won in IMS Mobility, respectively. HS Hyosung affiliates contributed 3.5 billion won, while Kakao Mobility and Shinhan Bank each invested 3 billion won.
These funds were injected in June 2023 through the private equity firm Oasis Equity Partners, when former President Yoon Suk Yeol was in office.
However, IMS Mobility was in a state of complete capital erosion, casting doubt on the profitability of the investments. Its liabilities totaled 141.3 billion won in 2023 — more than double its net assets of 55.6 billion won.
Moreover, 4.6 billion won of the investment was funneled directly to InnoBest — a company registered under the name of Kim Ye-seong's wife — through the purchase of existing shares.
"There are circumstances suggesting the investment is difficult to regard as a normal business decision," the special counsel team said.
Former Korea Securities Finance Corp. Chairman Yoon Chang-ho is summoned to the special counsel team’s office in Seoul, Thursday. Yonhap
The special counsel also considers the timing peculiar. At the time the investments were made, Kakao Mobility was under review by financial regulators over allegations of accounting fraud.
Kiwoom Securities was also embroiled in suspicions that former Chairman Kim may have had prior knowledge of a stock manipulation scheme linked to Ra Deok-yeon.
HS Hyosung Vice Chairman Cho Hyun-sang was accused by a former executive of holding undisclosed proxy assets and misappropriating funds.
The companies involved claim their investments were based on IMS Mobility's growth potential and deny any personal connection to the former first lady.
IMS Mobility stated that Kim Ye-seong left the company in 2021 and had no involvement in the 2023 investments.
The probe is expected to widen, with more figures in the financial and business world likely to be summoned.
HS Hyosung's Cho is scheduled to appear before the special counsel on Monday, while Kakao Founder Kim Beom-su is currently coordinating with the team regarding a summons.
Industry officials said that the legal risks, if prolonged, will begin to weigh on business sentiment.
Korea Securities Finance Corp., a key limited partner highly sought after by asset managers, faces concerns that its fundraising abilities could be affected.
Kakao-related stocks, which had surged on expectations of benefiting from the new government's artificial intelligence policy and stablecoin initiatives, are seeing a partial correction following news of the special counsel's plan to summon its founder.
Kiwoom Securities applied earlier this month for a license to enter the note issuance business, but repeated system failures and the growing scandal have cast doubt on the approval.
Concerns are also growing that external business activities led by HS Hyosung's Cho could be undermined. He currently serves as a member of the APEC Business Advisory Council, and Korea is the APEC chair this year.