Prosecutors Question MBK Vice President Kim Jung-hwan as Suspect... Homeplus Probe Accelerates

[Financial News] In connection with the Homeplus case, prosecutors investigating MBK Partners executives questioned Kim Jung-hwan, vice president of MBK Partners, on the 20th as a suspect. Following the questioning of former Homeplus Senior Managing Director Lee Seong-jin last month, the investigation is gaining pace as prosecutors continue to question key executives.
According to the legal community on the 20th, the Anti-Corruption Investigation Division 2 of the Seoul Central District Prosecutors' Office, led by Chief Prosecutor Lee Sang-hyeok, summoned Kim that day and is questioning him as a suspect. After the case was reassigned, prosecutors questioned a Homeplus finance executive identified as A on the 23rd of last month, and later questioned Lee at the end of the month as a suspect as well.
However, suspects have not yet been questioned in relation to MBK Partners Chairman Michael ByungJu Kim and Vice Chairman Kim Kwang-il.
Prosecutors suspect that MBK Partners and Homeplus executives knew in advance about Homeplus' deteriorating finances and the possibility of a credit rating downgrade, but concealed that information while promoting and issuing asset-backed short-term bonds (ABSTB) as if they were safe products.
Homeplus ABSTB are securitized instruments backed by card payment claims generated when Homeplus purchased goods using purchase-only cards. Shinyoung Securities Co., Ltd. issued them, and securities firms including Hana Securities sold them.
Korea Ratings Corporation downgraded Homeplus' credit rating from A3 to A3- in February last year. Homeplus then filed for corporate rehabilitation with the Seoul Bankruptcy Court in March of the same year. During that process, suspicions emerged that executives had issued the bonds while already aware of the possibility of a credit rating downgrade.
Shinyoung Securities Co., Ltd. and Hana Securities filed complaints against Vice Chairman Kim Kwang-il and others with prosecutors in April last year. The Financial Supervisory Service also detected allegations of fraudulent and unfair trading by MBK Partners and forwarded the case to prosecutors through the fast-track process. The case was then assigned to Anti-Corruption Investigation Division 3 of the Seoul Central District Prosecutors' Office.
In January, Anti-Corruption Investigation Division 3 sought arrest warrants for four people — Chairman Michael ByungJu Kim, Vice Chairman Kim Kwang-il, Vice President Kim Jung-hwan, and Senior Managing Director Lee Seong-jin — on charges of fraud under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes and violations of the Financial Investment Services and Capital Markets Act. The court rejected the request. The case was later reassigned to Anti-Corruption Investigation Division 2.
In May, prosecutors continued questioning related parties, including a Shinyoung Securities official as a complainant, a Korea Ratings employee in charge of credit ratings as a witness, and investors from the Emergency Countermeasure Committee of Homeplus Goods Purchase ABSTB Victims as victims.
Meanwhile, Homeplus plans to file an immediate appeal today against the Seoul Bankruptcy Court's decision to forcibly approve its rehabilitation plan.
 
[email protected] Choi Eun-sol Reporter