South Korean prosecutors investigating the alleged financial irregularities of Lone Star on Wednesday rejected the U.S. company's earlier claim that the probe was based on "allegations of vague conspiracies." "We are fairly and legally investigating the case with evidence rather than any (impure) intent," Chae Dong-wook, a chief investigation planner on the case, told reporters.
Lone Star Chairman John Grayken made the claim after the South Korean prosecution sought arrest warrants for fellow co-founder of Lone Star Ellis Short and two other executives of the U.S. equity fund on charges of manipulating the stock prices of the Korea Exchange Bank's (KEB) credit card unit. A court decision on the warrants is due Thursday.
Grayken also said the prosecution's attempt to detain Short and other Lone Star executives was "especially disappointing" because the authorities did not attempt to hear from KEB board members.
"Short and other executives can come to South Korea and fully refute the suspicions of stock-price rigging if they have something to say," Chae said.
According to prosecutors, the U.S. fund managed to buy a controlling stake in the bank's credit card arm at a below-market price after spreading false rumors of a capital write-down.
Prosecutors are also investigating whether the KEB's financial value was deliberately understated to facilitate the sale of the troubled bank to Lone Star at a below-market price in 2003.
Chae said the three Lone Star officials will be investigated as "suspects" if the arrest warrants are issued.
The decision to seek the warrants for the three executives was made very carefully because one of them was "the No. 2 man of the global equity fund, which is very important post," the prosecutor said.
He indicated the firm's U.S. headquarters might be indicted for its involvement in the alleged stock manipulation. "We already informed the KEB, a corporation, of our plan to investigate," he answered when questioned about the possible indictment of Lone Star.
In addition, Chae said Lee Hun-jae, a former South Korean finance minister, may soon face a criminal investigation over his possible involvement in the 2003 deal. Lee worked as a chief advisor of a domestic law consulting firm for Lone Star at the time.
Seoul, Nov. 1 (Yonhap News)
S. Korean prosecution dismisses Lone Star chairman's conspiracy claim |
