‘Oppa’ recordings deepen scrutiny of justice minister nominee’s alleged Covid drug lobbying

Justice Minister nominee Kim Seung-won has come under fire for allegedly lobbying on behalf of a drugmaker during his days as a lawmaker. Affected shareholders not only want him out of the Cabinet but also want him punished for allegedly peddling influence to help the drugmaker secure approval for a clinical trial that ultimately failed.

In 2021, Genencell — the pharmaceutical company in question — received 10 billion won ($7.42 million) in funding from Sejong Medical, a biotech-focused investment firm listed on the Kosdaq.

Sejong Medical became Genencell’s largest shareholder in October 2021 after acquiring shares and convertible bonds in the company. Genencell was developing a Covid-19 treatment.

A week later, the Ministry of Food and Drug Safety approved Genencell’s clinical trial plan for the treatment. Sejong Medical’s stock briefly surged before beginning a prolonged decline the following week. The Korea Exchange decided to delist Sejong Medical from the bourse in June this year.

Genencell ultimately failed to develop the Covid-19 treatment.

Prosecutors found that Genencell withheld troubling animal test results when it submitted data to the Ministry of Food and Drug Safety for clinical trial approval. One of five hamsters given the experimental drug died, and the other four developed abnormal symptoms.

Genencell’s founder Kang Se-chan had already pocketed 6.3 billion won by selling shares to Sejong Medical. Kang reportedly encouraged a broker, surnamed Yang, to buy shares in Sejong Medical. Yang had connected the Genencell founder with Kim.

“Pick up shares over there at Sejong Medical,” Kang told Yang. “It’s going up soon.”

The Seoul Western District Court sentenced Kang in December 2024 to three years in prison, suspended for five years, on charges including violations of the Financial Investment Services and Capital Markets Act and obstruction of official duties by fraudulent means. The case is now on appeal.

In a separate case, Kang and Yang have been indicted for promising a bribe tied to the alleged lobbying for the drug. The duo is standing trial at the Seoul Western District Court.

Sejong Medical shareholders plan to file petitions with the Seoul High Court, which is handling Kang’s appeal, as well as the Seoul Western District Court. Individual shareholders have previously filed petitions with the courts, but this is the first time they have organized a collective effort. More than 200 shareholders have reportedly said they would participate.

Kim, the newly nominated justice minister, has been accused of helping the drugmaker clear regulatory hurdles after receiving information from the broker about its stalled application.

Kim argues that the lobbying itself was not illegal. He cited the trial court’s ruling in Kang’s case.

“Even if broker Yang told Kim Seung-won to ‘ask the relevant department at the Ministry of Food and Drug Safety to process the matter quickly,’ it is difficult to immediately conclude that Yang was asking for favors such as skipping the approval review process or giving Genencell priority in the review,” the ruling said.

Eight days after the trial court’s ruling, prosecutors declined to indict Kim over allegations that he had agreed to accept a bribe in exchange for exerting influence because "it was difficult to conclude that [making] the request itself is illegal." The case was closed with a suspended indictment because the promise of a bribe substantiated certain elements of the charges.

Kim also rejected claims that Genencell was given special treatment. He noted in a statement posted on Saturday that its clinical trial took 11 days to clear regulators, compared to an average of 8.8 days for other new substances. Remdesivir, an intravenous antiviral medication manufactured by Gilead Sciences, secured approval for Covid-19 trials in three days.

Yet industry observers have questioned the comparison. Remdesivir had already been tested in Ebola patients before advancing to Phase 3 Covid-19 trials, which put it on a different footing from Genencell’s treatment.

Kim has also maintained that he merely relayed a complaint in the public interest as an elected official. Kim represented the Gyeonggi Suwon-A electoral district after winning the 2020 general election.

Yet the controversy has only deepened as a series of phone recordings raises questions about whether the lobbying carried an expectation of something in return.

“It would be really great if you could help with this,” broker Yang told Kim on Oct. 7, 2021, according to a transcript disclosed by independent lawmaker Han Dong-hoon. Yang is heard referring to Kim using the Korean honorific oppa, which a woman uses for an older man she knows well. “They’ve already secured 30 billion won in investment."

Kim allegedly engaged actively in the dialogue.

“The moment it gets approval from the Ministry of Food and Drug Safety, they could make hundreds of billions of won,” Kim replied. “There’s intense lobbying going on. Can you email me the materials?”

Rep. Han dubbed the lobbying effort between Yang and Kim “romantic and successful” as he released another recording Sunday.

“It’s being held up at the managerial level? Got it,” Kim replied after Yang complained to him that the case had been pending at the managerial level on Oct. 12, 2021.

Kim’s confirmation hearing preparation team issued a statement Sunday rejecting Han’s characterization.

“To claim that the lobbying was successful, there first needs to be proof that the review criteria were changed or preferential treatment was granted,” the team said. “Nowhere in the recordings is there any request for unconditional approval, relaxed standards or skipped procedures.”

BY KIM SEONG-JIN [[email protected]]