Prosecutors investigating the U.S. equity fund Lone Star's takeover of Korea Exchange Bank (KEB) at an allegedly below-market price said on Thursday they sought an arrest warrant for a former president of the bank for his involvement in the deal. Lee Kang-won, 56, was specifically charged with bribery and breach of trust and bribery, prosecution officials said.
He is suspected of directing former KEB officials to deliberately understate the bank's financial value to facilitate the sale of the troubled bank to Lone Star in 2003.
"Lee distorted the truth to make the sale of KEB look inevitable," Chae Dong-wook, a senior prosecutor in the Supreme Prosecutors' Office, told reporters. "He did not sell the bank at a normal price by inflating the bad debts of the bank, intentionally lowering its Bank for International Settlements (BIS) capital adequacy ratio and making a false report to its board of directors," Chae said.
Prosecutors are also looking into his possible collusion with the country's financial regulators in connection with the bank sale.
The KEB and Lone Star have been under criminal investigation since early this year over allegations that former KEB executives deliberately inflated the bank's debts and losses to quicken the sale of the bank.
The KEB's BIS 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, state auditors claimed earlier.
The BIS ratio is a critical measurement in determining the financial position of banks. A financial institution with a capital adequacy ratio of 8 percent or more is not usually considered to be in financial trouble.
Seoul, Nov. 2 (Yonhap News)
Arrest warrant sought for former KEB president |
