South Korea's prosecution said Tuesday it is seeking to arrest several executives of U.S. private investment fund Lone Star over its purchase of local lender Korea Exchange Bank (KEB) in 2003.
The Supreme Prosecutors' Office said it wanted to take into custody Lone Star's vice chairman Ellis Short and two former KEB outside directors on suspicion of manipulating the stock price of KEB's credit card arm. Requests for warrants to detain the three executives have been submitted to a local court, prosecutors said.
If the detention warrants are issued, state prosecutors are expected to contact their U.S. counterparts and ask for the handover of Short as well as Michael Thompson, Lone Star's legal advisor, and Steven Lee, former head of the firm's local office.
Seoul and Washington have an extradition treaty that allows for the transfer of criminals and those suspected of having committed a crime.
They added that all three outside directors had failed to respond to requests made on Oct. 24 for them to come to South Korea to answer questions on Monday.
The office also said it is seeking an arrest warrant for Yoo Hoe-won, head of the private equity investment fund's local operations, over the same suspicions as the other Lone Star executives. He was banned from leaving the country on Sept. 29 because of the allegations. KEB and Lone Star have been under investigation since April by the Financial Supervisory Service over suspicions that they spread false rumors in order to buy a stake in the Korean bank's credit card unit at a below-market price.
However, the financial regulator didn't disclose details of its own inquiry into the allegations. Also, it wasn't immediately clear when the prosecutors will begin their investigation.
In May, South Korea's top lender Kookmin Bank reached an agreement to buy a stake of as much as 71 percent in KEB from Lone Star and other shareholders. In the agreement, Lone Star had planned to sell its entire 50.5 percent stake in the bank.
Kookmin Bank missed the original deadline to pay for the deal on Sept. 16 since Lone Star is being investigated separately by prosecutors over alleged irregularities by the U.S. fund's purchase of KEB in 2003.
The ongoing investigation is generating interest since if a court rules that the stock manipulation took place, Lone Star could lose its major shareholder status in KEB since the court might order the investment fund to sell its shares in the lender.
Seoul, Oct. 31 (Yonhap News)
Prosecution seeks arrest of Lone Star executives |
