Suspicion spreads about candidate Kim Seung-won soliciting clinical approval for COVID-19 treatment

(Seoul=Yonhap News) Reporter Lee Young-seop = The controversy surrounding allegations that Kim Seung-won, the nominee for Minister of Justice, sought influence to secure approval for clinical trials of a COVID-19 treatment is gaining momentum.

This development follows revelations that Kim was aware of the astronomical potential profits from new drug development hidden behind his claim that the request was a public-interest grievance urging authorities not to unjustly delay approval for clinical trials of a domestically developed COVID-19 treatment.

Furthermore, it has been confirmed that Yang, the broker who requested Kim’s intervention for clinical trial approval, participated in illegal stock trading linked to the company and received substantial investments from its CEO. This raises questions about the extent to which Kim was aware of Yang’s illegal pursuit of vested interests.

According to a first-instance verdict in a case involving Kang, CEO of the bio-pharmaceutical venture company Genecell, on charges including embezzlement under the Act on Aggravated Punishment of Specific Economic Crimes, obtained by Yonhap News on the 6th, Yang met Kang, a professor at the same university, through an introduction by his advisor while pursuing a doctoral degree in 2020.

Yang, who operated a cosmetics and health supplement company, formed a cooperative relationship with Kang by discussing business status and external investments. Kang had founded Genecell in 2016 and had been engaged in developing and selling various new drugs.

It was later determined that Yang became involved in several illegal acts around the time Kang sought approval for clinical trials from the Ministry of Food and Drug Safety (MFDS) for the development of a COVID-19 treatment.

In September 2021, after the Food and Drug Evaluation and Research Institute requested improvements to the clinical trial plan, Kang asked Yang, who boasted of political connections, between October 6 and 8 of that year, to “help expedite the approval of the clinical trial plan.”

In response, Yang contacted Kim Seung-won, then a first-term lawmaker, requesting that he “facilitate swift processing by the MFDS.” Kim subsequently relayed this request to Kim Kang-rim, then head of the MFDS, on October 12.

Two weeks later, on October 26, the MFDS approved the Phase II and III clinical trial plans for the treatment.

It was revealed that Kang and Yang had traded stocks using undisclosed information related to Genecell at the time.

On October 19, 2021, Kang sold 660,000 shares of Genecell (worth approximately 6.3 billion won) to a company called Sejong Medical, and Sejong Medical signed a contract to acquire convertible bonds (CBs) of Genecell worth 5 billion won.

Through this, Sejong Medical invested approximately 11.3 billion won in Genecell, becoming its largest shareholder.

It was determined that Kang had been sharing relevant information with Yang since early October.

One day after the stock and convertible bond contracts were signed, on October 20, Kang sent a text message to Yang saying, “Pick up the shares there (Sejong Medical). It will rise soon.”

He also sent 100 million won to Yang to buy Sejong Medical stock. Yang purchased Sejong Medical stock with his own money and also recommended the stock to acquaintances.

Following news that Genecell had received approval for clinical trials of its COVID-19 treatment, Sejong Medical was grouped as a COVID-19 theme stock, causing its share price to fluctuate.

Kang’s first-instance court ruled that the fact that Sejong Medical acquired Genecell’s shares constituted undisclosed material information until three hours after its disclosure, and convicted Kang of using this information for stock trading.

It was also revealed that Kang had submitted manipulated and omitted experimental data to the MFDS to secure clinical trial approval and subsequently obtain government support funds, leading to a guilty verdict on these charges as well.

Two months later, in December 2021, it was found that Kang had invested 600 million won in the cosmetics company operated by Yang.

This raises suspicions that the investment was a reward for assisting in securing clinical trial approval and facilitating a successful corporate sale.

Public attention is now focused on whether Kim, who had a long-standing relationship with Yang, was truly unaware of such illegal pursuits of vested interests.

Kim’s side issued a press release stating, “After reviewing data showing therapeutic efficacy from Phase II overseas clinical trials, we simply transmitted a grievance to the head of the MFDS to ensure that the clinical trial procedures for the domestic treatment were not unjustly delayed.”

However, according to call and text records released by independent lawmaker Han Dong-hoon, Yang told Kim in September 2021, “If clinical trial approval is granted, that company will become a COVID company,” and added, “If this can be monetized, it will be good for your election next year.”

Kim replied, “Shall we meet right after Chuseok? I’ll send you the date.”

On October 7 of the same year, Yang told Kim, “It would be great if you could help with this,” explaining, “Because 30 billion won in investment has already been secured here. Money is scheduled to come in on October 15.”

He continued, “Option 1 is that I’d like to meet you if you have time this week or next week, and Option 2 is that I’d appreciate it if you could check the status of Genecell’s review process through the MFDS.”

Kim responded, “The moment the MFDS approves it, you can make tens of billions of won,” adding, “So there is fierce lobbying. Since I need to listen to explanations, could you send me some materials via email to save time?”

These conversations suggest the possibility that Kim was aware, at least before submitting the request to the head of the MFDS, that the company could reap astronomical profits upon clinical trial approval and that this could also benefit him.

Even if Kim’s claim that he merely transmitted a pure public-interest grievance is true, critics point out that it is difficult to avoid accusations of moral responsibility, given that various illegal acts were revealed around the time of Genecell’s clinical trial approval for its COVID-19 treatment.

In this context, recent complaints filed against Kim have drawn attention to whether he will face reinvestigation regarding these allegations.

Kim was investigated for requesting the head of the MFDS to approve clinical trials for Genecell’s treatment after receiving Yang’s request in October 2021. However, in December 2024, the prosecution issued a decision of deferred prosecution, citing the absence of direct monetary bribes and the difficulty of definitively establishing the illegality of the request.

Deferred prosecution is a type of non-prosecution decision where the charges are acknowledged but the case is not sent to trial.

A legal expert explained, “Since deferred prosecution is not a determination of innocence or non-guilt, reinvestigation is possible if conditions are met, such as the emergence of new evidence.”