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Prosecutors on Thursday announced the result of their contentious investigation into the sale of Korea Exchange Bank to the offshore fund Lone Star in 2003, at a price they say was between W344.3 billion and W825.2 billion (US $1=W914) below the true market price. They accused the former director general of the Finance Ministry's Financial Policy Bureau, Byeon Yang-ho, and former KEB president Lee Kang-won of conspiring with Lone Star to underrate the bank¡¯s assets and exaggerate its bad loans in a bid to drive the price down. Prosecutors arrested Lee and indicted four others including Byeon without detention. They dropped charges against former finance ministers Kim Jin-pyo, Lee Hun-jai and Jin Nyum.
Byeon¡¯s lawyers deny the charge, saying KEB was sold at a 14 percent management premium, which shows it was not sold too cheap. Byeon denies receiving money either from Lone Star or from lawyer Ha Jong-sun, who was arrested on charges of lobbying for the deal. Lone Star Funds chairman John Grayken issued a press release condemning the findings. "There is nothing new in the Supreme Prosecutors Office's latest public announcement,¡± it said. ¡°It is the same old broad conspiracy theory that never made any sense and still is not supported by any hard evidence.¡± Finance Minister Kwon O-kyu told reporters on the day the sale of KEB was ¡°inevitable in some sense¡± but the decision-making process in government ¡°partly lacked transparency.¡±
Pundits say the greatest credit goes to prosecutors for making a case over alleged manipulation of KEB's BIS capital adequacy ratio. Prosecutors say Byeon and Lee distorted the ratio five or six times since 2003, when negotiations for the sale of KEB started. But they were unable to offer clear evidence that Lone Star illegally lobbied government officials and politicians, the crux of the case. It makes little sense that the manipulations should have been led by the director general of the Finance Ministry's Financial Policy Bureau, who is not considered influential enough to do that. Prosecutors were unable to investigate the Lone Star officials who are at the center of the lobbying scandal. Former head of Lone Star Korea Steven Lee fled overseas before the investigations began and prosecutors failed to arrest the head of Lone Star Advisors Korea Yoo Hoe-won.
Prosecutors have come under attack for slapping a travel ban and tracking down bank accounts in the cases of Lee Hun-jai and Jin Nyum based on speculation without solid evidence. Lee was under an overseas travel ban for nine months after the investigation began. The bank accounts owned by his family members as well as his own were scrutinized thoroughly due to an allegation that he took out loans from KEB with excessively favorable conditions and was lobbied by Lone Star to facilitate the deal. The charges had to be dropped.
(englishnews@chosun.com )
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