Jang Ha-seong, ambassador to China, and Kim Sang-jo, former chief policy officer of Cheong Wa Dae, have reportedly invested six billion won and 400 million won respectively in the Discovery Fund, repayment of which has been suspended. in April 2019, creating a massive loss for investors. The fund was established by Ambassador Jang’s brother, Jang Ha-won, who was the CEO of Discovery Asset Management, and was therefore dubbed “Jang Ha-seong’s brother fund”. The fact that incumbent administration bigwigs Jang and Kim invested in the fund came to light during an investigation into Jang Ha-won, held at the Investigation Unit on Tuesday. financial crime from the Seoul Metropolitan Police Agency.

The Discovery Fund is a private equity fund sold to investors by banks and securities firms, including IBK Capital and Hana Bank, from April 2017 for a two-year term. The fund brokers solicited a lot of money by promoting that the US asset management company would invest in bonds to make profit and therefore its safety is guaranteed. However, the fund’s US management company was accused by the SEC of reporting false asset valuation information, resulting in the freezing of the assets, following which the redemption of the fund by South Korean investors was been suspended. Police suspect the management company attempted a Ponzi scheme, a fraud that attracts investors and pays out profits to previous investors with funds from newer investors. The amount of damages suffered by the “fraudulent fund” is estimated at 256.2 billion won.

Suspicions about Ambassador Jang’s involvement in the fund arose immediately after the takeover was suspended, as it was difficult to streamline the process by which a public bank sold a fund managed by a young asset management firm , thanks to which the total amount of financing has increased exponentially. grown up. News of Ambassador Jang and former political chief Kim’s investment fuels suspicions about Jang and Kim’s preferential treatment – that their losses could have been made up for by someone higher up.

Ambassador Jang and former policy chief Kim released a statement on Wednesday that they had not broken the law, and they issued a statement again on Thursday, saying they had neither asked for nor received the redemption amount. Their explanation, however, does not dispel doubts, mainly because, unlike other individual investors, whose money is locked in until the maturity date, Jang and Kim held open funds that allow deposits and free withdrawals. Are they aware in advance of the suspension of reimbursement and whether they received preferential treatment in terms of profits are crucial questions, but the answer has been submerged for 34 months. People cannot naively believe the words of the very people who are under suspicion.

In May 2021, the Financial Supervisory Service advised the IBK to compensate 40-80% for the losses of the Discovery Fund. However, if this fund was a fraud in the first place, no investor would accept this partial compensation measure. More importantly, the detailed account of what has happened since these bigwigs invested a large sum of money in the fund must come to light. Otherwise, this case would not stop at the abusive sale of the fund, but it could turn into a moral scandal of the administration.