MBK, Young Poong protest Korea Zinc CEO’s reappointment amid legal probe
Korea Zinc CEO Park Ki-deok speaks during the firm's regular shareholders’ meeting at Mondrian Seoul Itaewon, March 28. Courtesy of Korea Zinc
MBK Partners and Young Poong Group — Korea Zinc’s largest shareholder — opposed the reappointment of Park Ki-deok as CEO of the zinc smelting firm, they said Friday, citing an ongoing investigation into Park for suspected violations of the Capital Markets Act.
The MBK alliance, which has long been engaged in a management control dispute with Korea Zinc Chairman Choi Yun-beom, made these remarks in a statement issued by MBK’s investment vehicle, Korea Corporate Investment Holdings, and Young Poong’s affiliate, YPC.
The world’s largest zinc smelter held a board meeting the previous day and reappointed Park as CEO.
"Park, along with Choi and Chief Financial Officer Lee Seung-ho, is suspected of engaging in unfair trading practices in connection with the 2.5 trillion won ($1.8 billion) capital increase announced on Oct. 30 last year," the statement read. "He was explicitly named as a suspect in the prosecution’s April 23 search-and-seizure operation at Korea Zinc, under investigation for potential violations of the Capital Markets Act."
The alliance argued that reappointing an individual directly involved in a capital increase plan that harmed shareholders and currently under criminal investigation to lead a publicly traded company constitutes dereliction of the board’s duty to protect shareholder value.
In January, the Financial Supervisory Service, the country’s financial watchdog, referred Choi and other top management officials to the prosecution for alleged violations of the Capital Markets Act, citing suspected unfair trading in connection with their decision to carry out a large-scale capital increase.
The watchdog pointed out that the zinc smelting firm had already been planning the capital increase before completing its share buyback through the tender offer, but failed to properly disclose this information. It deemed the case to involve false statements in the tender offer report and unfair trading.
The MBK alliance insisted that Park’s reappointment should be put on hold until the allegations against him are fully addressed.
It also stated that the company should brief the board on the alleged legal breaches that prompted the prosecution’s action and that it must communicate its stance on the issue to shareholders.