A movie based on the true story of the takeover of the Korea Exchange Bank by US hedge fund Lone Star Funds has reignited controversy over the deal, which is still the subject of an ongoing investor-state dispute.
A group of activists and a lawmaker from the progressive Justice Party on Nov. 21 voiced concerns over the dispute between Lone Star and South Korea and called for the punishment of those responsible.
“We’ve requested the information regarding the (investor-state dispute) case but the Ministry of Justice and the Financial Services Commission have not shared much information. We only know that the verdict will be delivered soon and the government is not being transparent,” Rep. Sim Sang-jung told reporters.
Activists hold a press conference at the National Assembly on Nov. 21, calling for the punishment of those responsible for the scandal surrounding US private equity firm Lone Star Funds.
“The government should be transparent about what may cost trillions of won of people’s precious tax money,” added Kim Jong-woo, a lawyer who serves on the international trade committee at Minbyun, or Lawyers for Democratic Society.
The press conference was co-hosted by Minbyun and two other civic groups, People’s Solidarity for Participatory Democracy and Financial Justice.
Almost seven years after Lone Star sold KEB, the issue has reemerged. The film “Black Money,” a fictionalized depiction of Lone Star’s acquisition of KEB, was released Nov. 15.
The US firm, which bought the Korea Exchange Bank in 2003 at a below-market price, was accused of understating the bank’s value and financial soundness to drive down the purchase price.
“Even though it was more than 13 years ago, no one has been punished and it is not too late to bring (the culprits to) justice,” Sim said.
The activists urged the government to take action against the people at the heart of the scandal -- especially Steven Lee, the Korean American former head of Lone Star Korea.
Lone Star filed a complaint against the Korean government with the International Center for Settlement of Investment Disputes in May 2012, claiming it lost $4.7 trillion due to the government’s delay in approving the sale of KEB to Hana Financial Group as well as tax levied on its investment gain.
That sale took place almost nine years after the Texas-based private equity fund bought a 51.02 percent stake in KEB, then the fifth-largest bank in Korea but financially distressed after the Asian Financial Crisis. The PEF tried to offload its stake multiple times from 2005 to 2012 but failed to gain the financial watchdog’s approval amid pending legal issues, including allegations of stock manipulation.
In January 2012, the government finally approved the sale of KEB by Lone Star to Hana Financial Group. Lone Star made 4.7 trillion won (US$3.99 billion) in profit from the KEB sale.
By Park Ga-young (email@example.com)