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March 27, 2007
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| Prosecutors yesterday denounced a U.S. private equity fund for manipulating stock prices in the controversial takeover of Korea Exchange Bank in 2003, while the fund’s attorney accused the prosecution of conducting what it called a targeted probe of foreign capital. “It is a carefully premeditated crime of stock manipulation involving American executives of Lone Star and Yoo Hoe-won, who is well versed with situations in South Korea,” prosecutor Lee Dong-yeol said in his opening statement at the trial. Defense attorney Chang Yong-kook asserted that Mr. Yoo, the head of Lone Star’s Seoul office, was victimized by the Dallas-based investor. Mr. Yoo is charged with manipulating the stock price of KEB’s credit card unit in November 2003 so that the company would cost less to purchase. Lone Star’s vice chairman, Ellis Short, and general counsel, Michael Thomson, are accused of colluding in the scheme. The credit card firm was later merged with the bank, resulting in about 22.6 billion won ($24.4 million) in losses to its smaller shareholders, prosecutors said. Lone Star has also been under investigation since March last year over allegations that KEB’s value was deliberately underestimated to help the fund purchase a majority stake in the troubled bank at a bargain price. Investigators are seeking to take custody of the two U.S. nationals along with Steven Lee, former head of the company’s Seoul office, over their role in the takeover process and the stock manipulation charges under an extradition treaty with Washington. Mr. Yoo was also accused of perjury to avoid a parliamentary inquiry into the takeover case in October 2004 and breach of trust charges through the manipulation of earning rates of funds and sales of dishonored bonds at below-market prices. He has denied the charges against him. The next court date was set for April 23. |
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