[비즈한국] The Special Counsel team investigating First Lady Kim Keon-hee (led by Special Prosecutor Min Joong-ki) has selected the stock manipulation case involving Samwhan Corporation001470 as its first case. In the capital market, there is a prevailing view that the probability of indictment is high, as Samwhan Corporation has repeatedly hitched itself to various "political theme stocks" whenever the administration changed, resulting in sharp stock price surges each time.
Paying a 1 Million Won Entry Fee to Ride the Ukraine Theme Wave?
On May 14, 2023, Lee Jong-ho, former CEO of Black Pearl Investments, who managed Kim Keon-hee’s account in the Deutsch Motors067990 stock manipulation case, left a message in a KakaoTalk group containing individuals connected to the Marine Corps, saying, "Check Samwhan tomorrow." The next day, May 15, Samwhan Corporation’s stock price was 1,013 won. However, one week later, Samwhan Corporation attended a Poland-Ukraine reconstruction forum, and subsequently, its stock price rode the wave of being a "Ukraine theme stock," soaring to 5,500 won within two months.
The special counsel is primarily focusing on former CEO Lee. Lee is suspected of having reported on Ukraine-related business to the side of Cho Sung-ok, former chairman of Samwhan Corporation. The investigation has also secured press releases prepared by Lee concerning MOUs signed with Ukrainian local governments and companies at the forum. The team suspects that Lee may have planned the attendance at the forum to intentionally associate Samwhan Corporation with the Ukraine theme, despite the fact that no contracts had been finalized. They are focusing on the possibility that Lee acted as the "mastermind" of the stock manipulation.
The plan is to also investigate entities such as the Ministry of Land, Infrastructure and Transport, which hosted the forum at the time. Former Minister Won Hee-ryong also attended the Poland-Ukraine reconstruction forum held in May 2023 to promote domestic companies. While it was an event that any private domestic company could attend by paying a 1 million won participation fee, the special counsel is focusing on the possibility that individuals like former CEO Lee were aware in advance of the visit by former President Yoon Suk-yeol and the First Lady to Ukraine, as well as the participation of former Minister Won in the Poland forum.
The special counsel team estimates that the illicit profits gained by former Chairman Cho’s side amount to at least 29 billion won, even under a conservative estimate. This is lower than the 66 billion won in illicit profits estimated by financial authorities when they referred the Samwhan Corporation stock manipulation allegations to the prosecution last April for violations of the Capital Markets Act.
During Lee Nak-yon’s Democratic Party Leadership, Hiring His Brother Led to Stock Surge
This is not the first time Samwhan Corporation has latched onto a "political theme stock." In 2020, the company recruited Lee Gye-yeon, the younger brother of then-Democratic Party leader Lee Nak-yon, as its new president. While the company stated that it expected Lee to act as a bridge between labor and management to resolve conflicts and contribute to business stabilization, the market at the time suspected an attempt to "ride the theme stock wave."
In fact, after becoming the target of a no-capital M&A and welcoming new owners, Samwhan Corporation latched onto the "Lee Nak-yon theme" after Cho Sung-ok became chairman, at a time when the stock price was below 500 won. The stock, which had been rising slowly, surged over 1,500% to break the 6,000 won mark after an official announcement was made regarding Lee Gye-yeon’s inauguration as CEO. At the time, Samwhan Corporation dismissed the stock manipulation allegations as "groundless." However, industry consensus holds that the situation was a "typical stock manipulation repertoire," noting that a specific financial group participated in convertible bonds (CB) issued by Samwhan Corporation around the same time.
A source in the capital investment industry hinted, "I heard that in the early 2020s, hitching onto political theme stocks was the least expensive way to make money and the most free from scrutiny by financial authorities. It was a time when political theme stocks were created just because someone was a college or high school classmate of a politician, so there was a lot of talk about Samwhan Corporation’s 'recruitment of a politician’s brother.' Ultimately, wasn't hopping onto the Ukraine theme stock just another case of 'switching theme stocks'?"
On the 3rd, the special counsel searched Samwhan Corporation’s headquarters, along with six other companies including DYD219550 (the former largest shareholder) and Lee Seok Industrial Development (which sold its shares to DYD), as well as seven residences of former and current executives, including former CEO Lee Eung-geun. Their plan is to verify the process of repeated, volatile stock price fluctuations following the acquisition of Samwhan Corporation, and to confirm whether there was collusion with former CEO Lee Jong-ho in the process of latching onto the Ukraine theme, and whether there was any interaction with First Lady Kim Keon-hee or the Yoon Suk-yeol administration.
The aforementioned investment industry source added, "Whenever the administration changes, political theme stocks or policy-related theme stocks emerge. It is best to be suspicious of any listed company that puts its name on two or more theme stocks under the pretext of entering new businesses or recruiting executives."