Former Korean Wall Street sheriff joins US PEF board

New York-based EMP Belstar, of which about half of the top managers are of Korean origin, has recently hired as a non-executive director a former senior Korean prosecutor who had spearheaded investigations into high-profile embezzlement and fund fraud cases.

In a rare case for the PEF industry, the South Korean operations of EMP Belstar poached Kim Young-ki to review legal factors of its investments as it increasingly embraces environmental, social and governance (ESG) standards.

“From the perspective of (a prosecutor) punishing financial investors, I always regreted looking at private equity firms as speculative forces,” Kim said in an interview on Feb. 19 with Market Insight, the capital news arm of The Korea Economic Daily.

“There are many more healthy private equity funds than we think. I want to let the judicial sector and financial authorities know that private equity funds are not the target of regulation and punishment, but a part of a healthy capital market ecosystem.” In South Korea, more than 700 PEFs have been registered as of last year.

Kim led the joint investigation department on securities crimes at the southern district of Seoul Prosecutors’ Office from August 2019 until it was shut down last year. His position at the prosecutors' office was equivalent to the role of the attorney of the southern district of New York, known to be the “sheriff of Wall Street,” handling a broad range of cases, including white collar crime, cyber crime, public corruption and organized crime.

The Korean prosecutor's department had earned the nickname of the "death angel on Yeouido," the latter the so-called Korean Wall Street. But it was abolished last year as part of a government initiative to reduce prosecutors’ clout over criminal probes as a way to balance its power with the police.

Kim said he could not complete the high-profile financial crime cases involving Lime Asset Management and SillaJen Inc., a biotech company, over inappropriate fund sales and unfair stock trade, respectively, because of the department's closure.

Kim served as a legal advisor to the Korea Exchange between 2012 and 2014. He received a doctorate in criminal liability for illegal capital market transactions and regulations from Yonsei University in 2017. He co-authored books on illegal stock trade and capital market laws, while writing academic papers on how to calculate profits earned from illegal capital market transactions. He had also headed a task force team of the Supreme Prosecutors’ Office formed to set the criteria on calculating profit from illegal transactions.

Since last September, he has been working as a lawyer at Yoon & Yang, a leading Korean law firm.

“After gaining direct experience in the processes of raising money from the market and investing, I may be able to contribute to restoring market confidence in private equity funds, based on my experience as a prosecutor,” he said. “My philosophy is to apply stricter rules against illegal practices, while exercising punishment and regulations in the direction of saving the market.”

At EMP, Kim will scrutinize its entire investment process from the investment decision-making to the exit, as well as assessing legal risk. 

“Our socially responsible investing put us into the spotlight as the owner of the storage facility for coronavirus vaccines. That prompted our decision to further embrace ESG standards,” said Joonho Lee, EMP Belstar's co-founder and its Korean operation head, in reference to Korea Superfreeze. “Attorney Kim will bring us the last 'G' piece of the ESG criteria and perfect our ESG management.”

EMP Belstar established Korea Superfreeze in 2014, the country's sole company with the technology and resources to handle the widespread storage of vaccines. It will be used to store COVID-19 vaccines needed to be kept at ultra-low temperatures. 

Last year, EMP Belstar sold a 20% stake in the country’s largest smart cold-chain logistics complex to a consortium of SK Holdings and Goldman Sachs for 25 billion won ($23 million).

“To further expand our Korean business and provide the guarantee of transparency to Korean money’s overseas investors, we will thoroughly assess the risk factors together with attorney Kim,” said Lee. “We want to be a role model for other PEFs in terms of ownership structure and transparency.” 

Last year, EMP Belstar raised a total of $800 million from South Korean institutional investors to invest in the US Federal Reserve’s new Term Asset-Backed Securities Loan Facility (TALF) program. The TALF program was introduced by the US Federal Reserve during the 2008 global financial crisis as a way to provide liquidity to the loan market.

EMP Belstar is a combined entity of EMP Infra and Belstar Group. EMP Infra was established by ex-World Bank Vice President Donald Roth, while Belstar was founded by Korean-American Chairman Daniel Yun and Joonho Lee.

Write to Ri-Ahn Kim at knra@hankyung.com
 

Yeonhee Kim edited this article.