Investigations continue into fund’s tax practices
Lone Star Funds’ chairman John Grayken strongly criticized South Korea for what he called antipathy against foreign investors, in an about-face from his previously apologetic stance regarding mounting allegations of the fund’s involvement in murky business activities.
Lone Star Funds purchased Korea Exchange Bank (KEB) in 2003 and has now inked a sale deal with Kookmin Bank for KEB’s former holdings. Korean officials maintain that the fund, based in the U.S., owes back taxes on the purchase, as well as property acquisitions in Seoul. Lone Star insists that it used legal means to avoid high taxes on its purchase of the beleaguered bank. The investigation is ongoing.
In a press conference in New York, Mr. Grayken said that such an anti-foreign sentiment is making investment in South Korea unpredictable. Mr. Grayken’s remarks stand in stark contrast with those from his visit to South Korea a month ago, when he made an apology to the government for an array of alleged illegalities raised against its business transactions here.
In April, he said that he has never meant to avoid taxes on profits earned from the sale of the Korea Exchange Bank. But he seemed to change his word later, when he said that he has no obligation to pay them.
Mr. Grayken said the investigation by the prosecution, audit authorities and tax agencies into Lone Star’s tax evasion and other allegations should not be swayed by such anti-foreign bias, alluding that South Korea is a country where regulations are not fairly enforced.
Many market observers call a perceived bias against large-scale foreign investment here to an extent attributable to some foreign firms’ prior inappropriate business activities here. Some funds have been suspected of tax evasion and others have met charges of bribery and illegal currency transfer, among others.
Lone Star head criticizes S.Korea as biased toward foreign investors |
