MBK Partners Vice Chairman Kim Kwang-il is facing legal risks and controversies surrounding the management failures of Homeplus and DLive, raising concerns about governance at Korea Zinc. Given that MBK and Youngpoong hold a combined 41.1% stake in Korea Zinc, there are calls for a board member without legal or management risks to be appointed.
According to legal sources, prosecutors investigating the corporate rehabilitation of Homeplus sought arrest warrants for four executives, including Kim, in January. However, the court rejected the warrants, stating that while the consequences of the case are severe, the evidence presented so far is insufficient for arrest.
As a result, the Seoul Central District Prosecutors' Office has reassigned the case from the Anti-Corruption Investigation Division 3 to Division 2 for further investigation. In July, Kim was summoned twice as a suspect regarding allegations of fraud and violations of capital market laws.
With the transition to the Public Prosecution Service on October 2, only 90 days remain for related investigations. The Public Prosecution Service plans to conclude major investigations, including the alleged fraud involving MBK and Homeplus's short-term bonds, by the end of the year and decide on potential indictments against Homeplus executives.
Political pressure is also increasing, with lawmakers selecting Kim and others as witnesses for National Assembly hearings regarding Homeplus's corporate rehabilitation and management responsibilities. During a policy coordination meeting on September 10, Min Byung-deok, the chief deputy of the Democratic Party, emphasized the need for thorough investigations into the allegations raised during Homeplus's credit crisis and rehabilitation process.
In the business community, it has been customary for non-executive directors facing legal risks to step down to alleviate management burdens and secure board governance. For instance, former SK Group Chairman Cho Dae-sik resigned from his non-executive director position at SK Telecom in 2021 after being indicted without detention. In contrast, while Kim stepped down from his non-executive director role at DLive following the investigation, he continues to hold his position at Korea Zinc amid a management dispute.
As the second year of the management dispute at Korea Zinc unfolds, MBK and Youngpoong have claimed that the resignation of Korea Zinc Chairman Choi Yoon-beom is the starting point for normalizing the company's governance. However, Kim's governance issues have cast doubt on this assertion.
Additionally, following the acquisition of Homeplus and DLive, concerns are growing about Kim's management capabilities as the companies' performance has declined. Homeplus, where Kim has served as co-CEO since January 2024, unexpectedly entered corporate rehabilitation procedures in March of last year, shifting the burden onto employees, small businesses, and bondholders. Reports indicate that approximately 6,000 employees lost their jobs over the past year and a half.
Due to a depletion of operating funds, all Homeplus stores temporarily closed on July 13, but the company secured a 200 billion won emergency operating loan from Meritz Financial Group, averting immediate crisis. At that time, due to conflicts with MBK, Meritz decided to participate in the management dispute at Korea Zinc as a white knight for Chairman Choi.
Kim has also been involved in the management of DLive as a registered executive for 18 years, a significant concern for MBK. The firm acquired DLive for 2.2 trillion won during the peak of the paid broadcasting boom in 2007 but failed to find a suitable buyer, missing the opportunity to sell the company. The Korea Communications Commission has pointed out that DLive has been in a state of complete capital erosion for two years, demanding responsible decisions from MBK, such as capital increases or financial support.
Both political and business circles express concerns that the management failures seen with Kim and MBK could be repeated at Korea Zinc. With a record of 44 consecutive years of operating profits, Korea Zinc is pursuing large-scale investments in the U.S., including Project Crucible, raising questions about whether it can sustain long-term investment and growth under a private equity firm focused on maximizing profits through dividends and company sales.
As a result, foreign investors and minority shareholders at Korea Zinc are increasingly leaning towards supporting Chairman Choi over MBK and Youngpoong. At an extraordinary general meeting held on September 9, Baek In-kyu, a candidate recommended by Korea Zinc, was appointed as an audit committee member with 81.8% of the voting rights in attendance, with 98.3% of foreign and foreign institutional voters and 79.1% of domestic individual shareholders supporting him.
* This article has been translated by AI.
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