Israeli venture capital firm Yozma to sue JTBC

Busan Mayor Park Heong-joon, left, and Yozma Group Chairman Yigal Erlich pose after signing a memorandum of understanding at Busan City Hall in this April 13 file photo. Courtesy of Busan Metropolitan Government

By Park Jae-hyuk

Israeli venture capital firm Yozma Group's Korean subsidiary said Thursday it decided to file a 10 billion won ($8.7 million) damage claim against JTBC and its producers, as well as a separate criminal suit against its chief news producer, over the cable channel's news report on July 6 that questioned the credibility of the company's businesses.

JTBC reported last week that Yozma did not have offices in Tel Aviv or Hong Kong, contradicting the contact information on its official website. Furthermore the broadcaster cited remarks from an anonymous former Yozma employee questioning the company's investment capabilities.

The news report came out amid an intensifying conflict over Busan Mayor Park Heong-joon's pledge to create a 1.2 trillion won fund with Yozma for startups in the city. The mayor, who belongs to the conservative main opposition People Power Party, signed a memorandum of understanding (MOU) in April with Yigal Erlich, chairman of Yozma. The firm entered Korea in 2015, after being mentioned by the conservative Park Geun-hye administration as an exemplary investor for startups.

Since their agreement, several Busan Metropolitan Council members belonging to the ruling Democratic Party of Korea and progressive civic groups in the city have called for the mayor to disclose the full details behind the agreement with Yozma.

Yozma claimed the report has caused serious damage to the company's credibility, businesses and global investors.

“The places where JTBC producers visited were our previous offices. We explained to them about our new offices several times, providing them with the addresses, phone numbers and photos,” the company said in a statement. “Yozma Group's Hong Kong office moved to Singapore as many other foreign investment firms did last year, due to the COVID-19 pandemic and worsening political situation in Hong Kong.”

According to Yozma, the Monetary Authority of Singapore licensed its Singapore office, which is in charge of the group's businesses in Asia except Korea.

“Yozma Group successfully listed more than 20 companies on the NASDAQ and invested more than 210 billion won in innovative tech firms after it entered Korea as Yozma Group Korea in 2015,” the company said. “Over the past eight years, Chairman Erlich has stayed in Korea for a couple of months every year to give advice for Yozma Group Korea and direct its businesses.”

Yozma also said it retracted its plan to participate in Busan's fundraising campaign, claiming that its intention was distorted for political purpose.

Apart from Yozma's legal action, Busan also said on July 8 that the city government would file a petition against the broadcaster with the Press Arbitration Commission.

“The MOU signed between Busan and Yozma just specified their comprehensive cooperation without forcing any financial support from the city,” a Busan Metropolitan Government official told reporters last week. “It was comprised of clauses drawing investments from Yozma for startups in Busan.”