Police investigate further allegations of embezzlement, etc.

Hwasin Tech’s voting rights were delegated to an aide and suspicion of ‘agent management’…

The fact that the key police in the investigation to secure new recruits for Chairman Bae of ‘living in Europe’ has been conducting an additional investigation into KH Group Chairman Bae Bae Sang-yoon since the beginning of this year was confirmed as a result of coverage by Sisa Journal. It is related to the suspicion that KH Group affiliates used convertible bonds ( CB ) secured by KH Group affiliates to embezzle the company’s funds and secure management rights. However, the investigation is not expected to be easy. This is because Chairman Bae is escaping overseas to avoid prosecution investigations related to the case of illegal remittance to North Korea, the case of Lee Jae-myung, the representative of the Democratic Party, and the obstruction of bidding at the Alpensia resort.

Hwashin Tech (formerly known as Innowise) is at the center of the case of securing a CB of 10 billion won through disguised payment . As a mid-sized auto parts company that once represented the Daegu region, it became a hot topic in 2006 when it was listed on the KOSDAQ market for the first time in the industry. Dark clouds over Hwasin Tech came at the end of 2018 when management rights were transferred to Mr. Amugae Nam. Nam is known as a person who has been secretly working as a corporate hunter in the capital market since the 2000s. Like Chairman Bae, he is also escaping overseas to escape the prosecution’s investigation. In 2006, when a prosecution investigation began on charges such as market manipulation, he fled to Hong Kong and was repatriated to Korea.

In the meantime, all the companies Nam has touched have been dismantled. The case of Hwashin Tech was no different. After coming under the rule of Mr. Nam, the outflow of funds continued and the situation was greatly tilted, and in June 2021, it was finally decided to delist. Chairman Bae is suspected of being actively involved in the process of Hwashin Tech’s downfall.

Time goes back to February 13, 2020. On this day, Hwashin Tech held a board meeting and decided to issue a CB worth 10 billion won. It was under the name of ‘financing for operating funds and acquisition of securities of other corporations’. On the day of the board of directors’ meeting, the Global Tech No. 1 Association paid 10 billion won for the acquisition of CB . Global Tech No. 1 Association is an investment association known as Nam as the actual owner. However, the CB delivered to Hwashin TechThe acquisition price was remitted under the name of a loan to the Global Pharma Investment Association from February 14th to the 6th, the day after the deposit. The Global Pharma Investment Association is also known to be owned by Mr. Nam. In other words, the CB acquisition money from Nam went back to him.

As a result, Volcano Tech issued only CB without actual payment. However, the 10 billion won CB issued by Hwashin Tech ended up going back to BSP Spirits (5 billion won) and YK Partners (5 billion won), not to the No. 1 Global Tech Association. These companies are 100% subsidiaries of KH Feelux, of which Chairman Bae is the largest shareholder.

It is pointed out that this has nothing to do with the relationship between Mr. Nam and Chairman Bae. Chairman Bae, a former gangster, served as a front for corporate hunters with funds earned through businesses such as saunas in the Gangnam area in the 2000s, and started hunting companies himself from the 2010s. This is the background that enabled him to create the KH Group , which has over 40 subsidiaries in electronics, construction, entertainment, hotels, and resorts . In this process, Chairman Bae is said to have formed a mutually dependent relationship with Mr. Nam as an economic community. Some of the CBs handed over to KH Group affiliates were

immediately cashed in. YK Partners provided CB to Hwashin Tech twice in March and May 2020.He requested redemption of bonds and received 4.5 billion won. The remaining CB was converted into stock in July of the same year and was used to secure management rights for Hwashin Tech. As a result, KH Group affiliates became the largest shareholders of Hwashin Tech. As of the end of last year, BES Spirits안전놀이터 (19.68%) and YK Partners (1.97%) hold a 21.65% stake in Hwashin Tech.

After these companies secured the management rights of Hwashin Tech, they delegated voting rights to Mr. Jeon and appointed him as their agent, and Mr. Jeon appointed his aide, Mr. Jo, as the CEO. This gave Jeon virtually control over Hwashin Tech, even though his stake was nil. However, even after that, Hwashin Tech’s funds continued to flow out. The leaked funds were used to secure management rights for other companies. As a result, Hwasin Tech’s cash holdings, which were worth about 10 billion won before Chairman Bae secured management rights, bottomed out as of the end of September last year.

Hwashin Tech’s minority shareholders suffered the most damage as they went through a series of luxurious escapes to and from Hawaii, the Philippines, and Vietnam . Minority shareholders have decided to form an alliance right after the delisting, raising suspicions of corruption by the management of Hwashin Tech. They are continuing to file complaints against the management, demanding the normalization of the company and the recovery of funds leaked to the outside. Minority shareholders are recently arguing with the management to prevent the sale of Hwashin Tech’s assets. Previously, the management of Hwashin Tech presented an agenda to sell the headquarters real estate and all mold equipment at the shareholders’ meeting in March. The Minority Shareholders Association expects that the management will liquidate the last remaining assets of Hwashin Tech, such as real estate and facilities, leak them out, and go through the process of closing the business.

Despite this situation, the investigation into Chairman Bae is not expected to be easy. Because he can’t guarantee his recruitment. Chairman Bae left the country for business reasons, including the acquisition of a resort, in June of last year, when the prosecution’s investigation began in earnest, and has been living a life of refuge, traveling to Hawaii, the Philippines, Singapore, and Vietnam. Prosecutors issued an Interpol red wanted notice against Chairman Bae in April, and recently investigated the entourage who helped him escape, but has not achieved any significant results. An official familiar with the situation in the non-capitalized M&A industry said, “I know that Chairman Bae is staying in Europe with other corporate hunters who are currently wanted.” that,” he said.

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