Prosecutors have a bumpy ride ahead in their investigation of irregularities in Lone StarĄ¯s buyout of Korea Exchange Bank after a court refused arrest warrants for three former and incumbent Lone Star executives. The Seoul Central District Court rejected the application for warrants against Lone Star Advisors Korea head Yoo Hoe-won, Lone Star vice chairman Ellis Short and the U.S. private equity fundĄ¯s legal advisor Michael Thompson, saying there was no flight risk or fear that they will destroy evidence. It told prosecutors to find more evidence of the three menĄ¯s involvement in manipulating the takeover.
They are suspected of plotting to take over KEB on the cheap by spreading false rumors about KEBĄ¯s capital reduction to pull down the bankĄ¯s stock price.
On Thursday afternoon, prosecutors also filed for an arrest warrant for former KEB president Lee Kang-won on charges of breach of trust and taking bribes. Prosecutors accuse Lee of deliberately underestimating the bank's value, inflating the bankĄ¯s bad loans and artificially lowering the bankĄ¯s BIS capital adequacy ratio. Lee is accused of causing some W700 billion (US$1=W939) in losses to the bank and shareholders by submitting fake reports to the board of directors. He is also suspected of taking hundreds of millions of won in bribes from computer suppliers and interior designers who renovated the bank.
