Jang Ha-sung, South Korea’s ambassador to China, and Kim Sang-jo, President Moon Jae-in’s former chief of staff for policy, were belatedly found to have invested in funds created by Jang’s younger brother.
Jang was Moon’s first chief of staff for policy before being appointed as ambassador to China. Kim was Moon’s first chairman of the Fair Trade Commission before being appointed as his third chief of staff for policy.
Jang and Kim are said to have invested about 6 billion won ($5 million) and 400 million won, respectively.
The fund products in question -- Discovery US Fintech Global Bond Fund and Discovery US Fintech Real Estate Senior Bond Fund -- were made by Discovery Asset Management Co. founded in November 2016.
They were sold through 12 banks and stock brokerages for two years from April 2017. Among them was the government-run Industrial Bank of Korea, which accounted for the lion’s share of the funds sales.
Jang and Kim invested in July 2017, shortly after being appointed as Moon’s first chief of staff for policy and his first chairman of the Fair Trade Commission, respectively.
Then in April 2019, the US securities authorities froze the assets of a US asset management firm that was operating the funds locally after finding it made false reports.
As a result, redemption was suspended. It amounted to 256.2 billion won as of April last year. IBK took up about 30 percent, or 76.1 billion won, of the total.
When they sold the funds on behalf of Discovery Asset Management, the financial products passed among investors as Ambassador Jang’s younger brother’s funds.
The Industrial Bank of Korea internally classified the funds as ultrahigh risk products. Nevertheless, the state-run bank sold financial products by an asset management startup worth 670 billion won. It is questionable if this would have been possible without external influence.
The fact that two former high-ranking Cheong Wa Dae officials invested in the funds were belatedly exposed in the process of the Seoul Metropolitan Police‘s questioning of Jang Ha-won, the chief executive of Discovery Asset Management, last week.
Investors suffering damage from the suspended redemption suspect Ambassador Jang and Kim of having received some special favors. Prior to the revelation, they had kept silent on whether they invested in the funds, even though suspicions of their possible involvement were raised on several occasions.
With their investments exposed, Jang and Kim admitted that they did invest, but argued that it was nothing illegal.
Of course, it is not illegal for public servants to invest in fund products.
But it is very inappropriate for the presidential chief of staff for policy, who has significant influence on the government’s economic policies, to invest a large amount of money in fund products launched by his younger brother.
The chairman of the Fair Trade Commission should have known better, considering the nature of his job.
And yet, high-ranking officials invested to make more money while in office. This is ethically condemnable.
Kim was the presidential chief of staff for policy when he raised the “jeonse” price of his apartment by 14 percent in March last year before new tenancy laws limiting price increases to 5 percent took effect for two-year leases.
People expect high-ranking officials to show self-restraint in pursing profits, but it is hard to find that in Jang and Kim.
The truth must be found about what happened to the funds after their investments. Did they use inside information, and were there any special favors in the process of attracting capital? If the entire picture is not laid bare, suspicions about the morality of the current regime will only grow bigger.
By Korea Herald (firstname.lastname@example.org