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The Board of Audit and Inspection on Monday said it has evidence that a senior official with the Financial Supervisory Service in 2003 pressured subordinates to tweak Korea Exchange Bank figures to permit the sale of the bank to the offshore investment firm Lone Star. The BAI said it will summon the official, identified as Baek, to question him about suspicions that he told subordinates to use documents that put the bank¡¯s BIS capital adequacy ratio below its actual worth. Then-KEB president Lee Kang-won also admitted to errors in the process of calculating the bank¡¯s BIS ratio, auditors said, but Lee did not say documents were manipulated or he gave orders to do so.
The FSS in June 2003, when negotiations for the KEB sale were underway, set its BIS ratio at 9.14 percent. This is above 8 percent, the mark that would make it ¡°ailing¡± and thus eligible for sale to Lone Star. But KEB sent a five-page fax to the FSS on July 21, 2003, which put the BIS ratio at 6.16 percent at the end of 2003, and the FSS subsequently classified KEB as potentially ailing.
Any illegality in the original sale to Lone Star could create problems for those involved, but the sale is unlikely to be voided. The law says agreements can be voided only when there is clear damage to society. There could, however, be room for KEB shareholders to sue for the agreement to be cancelled if it is found that the government deceived them and Lone Star knew and was actively involved in the process.
At the time of the sale in 2003, KEB¡¯s largest shareholder was Commerzbank of Germany with 32.55 percent, and government-related shareholders including the Export-Import Bank of Korea with 32.50 percent and the Bank of Korea with 10.67 percent accounted for 43.17 percent. The rest was owned by ordinary shareholders.
(englishnews@chosun.com )
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