Court to re-examine warrants for Lone Star executives |
A local court here will again decide whether to issue arrest warrants for the vice chairman of the U.S. equity fund Lone Star and two other executives on charges of rigging stock prices on Tuesday.
The firm's Vice Chairman Ellis Short and the two others are suspected of manipulating stock prices of the Korea Exchange Bank's (KEB) credit card arm in November 2003 after Lone Star's takeover of South Korea's fifth-largest bank.
The other two are General Counsel Michael Thompson and Yoo Hoe-won, the head of Lone Star Advisors Korea, the local unit of the Texas-based company.
State prosecutors made the request for warrants Friday just hours after the court rejected their first demand to arrest the three people, citing the need to provide additional evidence.
The prosecution also requested Short and Thompson, both Americans, to appear before the Seoul prosecution Wednesday. Yoo is currently in Seoul.
"I haven't yet been reported about their answers," Chae Dong-wook, a senior prosecutor of the Supreme Prosecutors' Office, told reporters.
KEB and Lone Star have been the subjects of a criminal investigation since last month on allegations that they spread false rumors of a capital write-down by the Korean lender's credit card unit in order to amass bigger stakes in the company at a below-market price.
The stock price of the card company nosedived from 6,700 won (US$7) to 2,550 won a share in a short period of time amid the rumors. Lone Star is estimated to have made 22.6 billion won in profits from the purchase of stocks dumped by small shareholders of the card company, according to financial officials here.
Prosecutors are also investigating whether KEB's financial value was deliberately understated to facilitate the sale of the troubled bank to Lone Star at an alleged below-market price in 2003.
In June, state auditors said the bank's value was intentionally underestimated by its former executives, but that Lone Star did not commit any wrongdoing in its acquisition of the bank.
The prosecution originally planned to announce the results of its probe into the alleged financial wrongdoing involving Lone Star at the end of this month.
"The court's refusal to issue warrants is expected to cause some delay in the schedule (for the announcement)," Chae said.
In a related development, the court will decide on Monday over whether to allow the immediate arrest of Lee Kang-won, the former president of KEB, for taking a leading role in the alleged underestimation of the bank's value.
The private fund bought a controlling 50.5 percent stake in KEB for 1.4 trillion won in 2003, and recently signed an agreement with South Korea's top lender Kookmin Bank to resell the now 64.62 percent stake in KEB. The deal, which is expected to give it a profit of more than 4 trillion won, has been delayed as prosecutors examine allegations of wrongdoing by the U.S. fund.
Lone Star is also under a separate investigation for allegedly evading a large amount of taxes and illegally transferring foreign dollars abroad after it profited from the 2003 bank acquisition.
Seoul, Nov. 6 (Yonhap News)
