The prosecution on Wednesday sought an arrest warrant for the head of an affiliate of the U.S. equity fund Lone Star as part of an investigation into alleged financial irregularities involving the fund, a senior prosecutor said.
Cheong Heon-choo, the head of Hudson Advisors Korea Inc., an asset management subsidiary of Lone Star, was charged with tax evasion, embezzlement and breach of trust.
"We requested a local court to issue an arrest warrant for Cheong since we obtained circumstantial evidence of his involvement in the company's financial illegalities," senior prosecutor Chae Dong-wook, told reporters. He did not reveal the amount of unpaid taxes or embezzled funds, however.
The Seoul Central District Court is scheduled to decide whether to issue the warrant on Thursday.
Lone Star is suspected of evading 14.7 billion won (US$15.4 million) in taxes and transferring $8.6 million overseas through its two affiliates in South Korea without permission.
Chae said that the proposed arrest is not directly related to Lone Star's dubious 2003 deal to acquire Korea Exchange Bank (KEB).
The Texas-based fund is under separate investigation for allegations that it took over the fifth-largest lender in South Korea at a below-market price in 2003 based on manipulated financial records.
As part of the investigation into the KEB sale, prosecutors on Wednesday summoned Lee Kang-won, a former KEB president, Jeon Yong-jun, former chief of the bank's management strategy headquarters, and Park Soon-poong, head of consulting firm Elliot Holdings to investigate how the value of the bank was underestimated at the time.
State auditors earlier said that former KEB executives exaggerated the bank's estimated losses and debts to justify Lone Star's takeover of the bank at a fire sale price.
KEB's Bank for International Settlements (BIS) capital adequacy ratio stood at well over 8 percent as of the end of 2003, far higher than the 6.16 percent estimated by KEB at the time, the Board of Audit and Inspection claimed.
The BIS capital adequacy ratio is a critical measurement in determining the financial position of banks. In related regulations, a financial institution with a capital adequacy ratio of 8 percent or more cannot be classified as a financially troubled financial company.
Seoul, July 26 (Yonhap News)
Arrest warrant sought for head of Lone Star affiliate |
