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Prosecutors on Thursday raided the offices of the U.S. fund management firm Lone Star in search of evidence that it bought Korea Exchange Bank at a knockdown price in 2003. The Supreme Prosecutors Office raided eight locations with connections to the offshore fund, including its Korean branch office, a document storage facility of the firm’s subsidiary Lone Star Advisors Korea and the homes of its CEO, identified as Yu, and of the head identified as Chung of a second affiliate, Lone Star Hudson Advisors Korea.
Prosecutors also obtained an arrest warrant for Steven Lee, the fugitive former head of Lone Star’s Korean operations, who is believed to have played a key role in the allged tax evasion, and asked the U.S. to hand him over under a bilateral extradition treaty. They also slapped overseas travel bans on some 20 people related to the fund.
The investigation into whether Lone Star took over KEB at an unreasonably low price in 2003 came at the urging of a National Assembly standing committee. Prosecutors are also investigating a complaint from the National Tax Service that Lone Star dodged taxes of some W14.7 billion (US$14.7 million) it should have paid on the sale of the Star Tower in Seoul.
Supreme Prosecutors Office planning chief Chae Dong-wook said the tax dodging and illegal money transfer charges are up for investigation first, and Lone Star’s takeover of KEB sale will follow once the Board of Audit and Inspection has completed its audit.
(englishnews@chosun.com )
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