May 26, 2022
Jang Ha-seong, Ambassador to China, and Kim Sang-jo, former chief of policy at Cheong Wa Dae, are reported to have invested six billion won and 400 million won, respectively, in the Discovery Fund, the redemption of which was suspended in April 2019, creating massive loss to investors. The fund was created by Ambassador Jang’s brother, Jang Ha-won, who was the CEO of Discovery Asset Management, and was thus nicknamed as “Jang Ha-seong’s brother fund.” The fact that Jang and Kim, the bigwigs of the incumbent administration, had invested in the fund was disclosed in an investigation of Jang Ha-won, which was held on Tuesday at the Seoul Metropolitan Police Agency’s financial crime investigation unit.

The Discovery Fund is a private equity fund sold to investors by banks and securities companies, including IBK Capital and Hana Bank, from April 2017 for two years. Fund dealers solicited a great deal of money by promoting that the U.S. asset management company would invest in bonds to make profits and therefore its safety is guaranteed. However, the fund’s U.S. management company was accused by the SEC of reporting false information about the valuation of assets, leading to the freezing of assets, as a result of which the redemption of the fund by South Korean investors was suspended. The police suspects that the management firm attempted a Ponzi scheme, a fraud that entices investors and pays profits to earlier investors with funds from more recent investors. The…

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