South Korean AI company Upstage, which develops large language models and document-processing AI, is facing renewed conflict-of-interest scrutiny as it prepares for an initial public offering.

The issue centers on former presidential secretary Ha Jung-woo’s past stake in the company after Upstage joined the government’s AI foundation model project in 2025 and received 560 billion won (US$370 million) from the state-backed Korea National Growth Fund.

Upstage was one of five operators selected for South Korea’s AI project, which aims to develop domestic foundation models with funding, data resources, and high-performance computing infrastructure.

The issue drew attention during the June 3 parliamentary by-election in Busan’s Buk-A constituency.

Independent lawmaker Han Dong-hoon alleged that Upstage benefited from Ha’s ties while Ha was in office.

Upstage said Ha received the shares for a non-executive advisory role in 2021.

The company said 4,444 unvested shares were returned at par value when Ha entered office, while 5,556 vested shares were placed in a blind trust under the Public Service Ethics Act.

Upstage appointed KB Securities and Mirae Asset Securities as lead underwriters in December.

Bankers said the controversy could weigh on the company’s valuation and regulatory review.

🔗 Source: The Korea Times

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