Query separate from this week’s audit board findings
The Supreme Public Prosecutor’s Office on June 20 announced it had begun investigating Byeon Yang-ho, a former Ministry of Finance and Economy official, as part of their investigation into Dallas-based private equity fund Lone Star’s purchase of Korea Exchange Bank (KEB) in 2003 at an artificially low price. Mr. Byeon, who played a decisive role when Lone Star obtained the qualification necessary to purchase the bank, was arrested separately on June 14 for receiving a bribe from Hyundai Motor Group. An investigation by the Board of Audit and Inspection early this week found against KEB in the deal, but placed no official blame on Lone Star, nor the finance ministry.Prosecutors are also closely investigating Jeon Yong-jun, a former KEB official, who was arrested for taking 200 million won (200,000 USD) from Park Sun-pung, representative of Eliot Holdings. Eliot Holdings was the main consulting company involved during the sale of KEB to Lone Star, and Mr. Jeon was instrumental in their selection for that role. The prosecutors think that Mr. Jeon knows exactly which roles the Ministry of Finance and Economy, the Financial Supervisory Commission (FSC), and the Financial Supervisory Service (FSS) played in the sale. The prosecutor’s office has arrested Woo Byung-ik, head of KDB & Partners, Lee Dae-shik, former managing director of KDB, and Shin Dong-hoon, former vice president of Hudson Advisors Korea, a local unit of Lone Star, and is investigating them on charges of bribery in the sale. The prosecution is currently focused on uncovering why KEB management attempted to sell the bank to Lone Star in an irregular way, and precisely how Lone Star lobbied the executives of the bank.
