'Homeplus crisis' Arrest Warrants for Michael ByungJu Kim and Other MBK Executives Dismissed... "Insufficient Substantiation of Charges"

[Financial News] Four members of MBK Partners’ management, including Chairman Michael ByungJu Kim, regarded as key figures in the so-called Homeplus crisis, have avoided being taken into custody.
According to the legal community on the 14th, Judge Park Jeong-ho of the Seoul Central District Court, who is in charge of warrant proceedings, at around 5 a.m. that day dismissed the prosecution’s requests for arrest warrants for Chairman Kim, Gwang-il Kim, Vice Chairman of MBK Partners and Co-CEO of Homeplus, Vice President Kim Jeong-hwan, and Managing Director Lee Sung-jin of MBK Partners, who had been sought on charges including fraud under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes and violations of the Financial Investment Services and Capital Markets Act (FSCMA).
Judge Park Jeong-ho of the Seoul Central District Court stated, "It is clear that the damage suffered in this case is very serious; however, based solely on the materials submitted so far, there is insufficient substantiation of the charges to justify detention," adding, "Considering the degree of substantiation and the progress of the investigation, the need for detention on the grounds of possible destruction of evidence or risk of flight is outweighed by the need to afford the suspects sufficient opportunity to defend themselves while not in custody."
He also pointed out that, unlike in a full trial, during warrant proceedings suspects do not have the right to access the prosecution’s evidence and therefore cannot fully grasp the content of the evidence in advance. Judge Park explained, "Because no witness examination is conducted, the suspect cannot confront witnesses and exercise the right to cross-examination with respect to testimonial evidence," emphasizing, "In particular, with regard to subjective elements such as intent, as well as logical proof or evaluative aspects, a sufficient process of analysis and impeachment may be necessary."
Judge Park held the pretrial detention hearing (substantive warrant review) for the four individuals from around 10 a.m. to approximately 11:40 p.m. on the 13th, lasting about 13 hours and 40 minutes.
They are accused of causing losses to investors by issuing and selling large amounts of Asset-Backed Short-Term Bond (ABSTB) even though they knew that Homeplus’s credit rating was going to be downgraded.
Prosecutors are said to have alleged that MBK Partners, the majority shareholder of Homeplus, inflicted losses on investors by issuing bonds totaling approximately 116.4 billion won—specifically, ABSTB worth about 106.4 billion won, commercial paper (CP) worth about 10 billion won, and short-term corporate bonds, including Straight Bond (SB)—between February 17 and 25 last year, without disclosing that Homeplus’s credit rating could be downgraded.
The prosecution believes that MBK Partners was aware of the possibility of a credit rating downgrade even before issuing the ABSTB on February 17 last year, and it is reported to have secured indications that as early as 2023 the company was preparing for the potential corporate rehabilitation of Homeplus.


kyu0705@fnnews.com Kim Dong-gyu Reporter