Kim Byung-joo, Chairman of MBK Partners. (Photo courtesy of MBK Partners)

 

 

[Alpha Biz= Kim Jisun] South Korea’s financial authorities plan to refer Kim Byung-joo, Chairman of MBK Partners, and other related executives to prosecutors this week on charges of engaging in fraudulent transactions related to the ongoing “Homeplus scandal.”



According to Seoul Economic Daily on Sunday, the Financial Services Commission (FSC) is expected to notify prosecutors via an expedited process (known as a “fast track”) of suspected fraudulent practices by Homeplus and its major shareholder MBK Partners. While the regular meeting of the Securities and Futures Commission (SFC) is scheduled for April 23, the referral may occur earlier.



Those expected to be named include Kim Byung-joo; MBK Vice Chairman and Homeplus Co-CEO Kim Kwang-il; and Homeplus CEO Cho Joo-yeon. Authorities have been focusing on allegations that Homeplus and MBK Partners concealed preparations to file for corporate rehabilitation while issuing short-term debt instruments—a move that could constitute fraudulent misrepresentation.

On April 10, Financial Supervisory Service (FSS) Governor Lee Bok-hyun told reporters, “While the investigation into MBK Partners is ongoing, significant facts have already been confirmed. We are coordinating with prosecutors and the SFC to take appropriate actions within the month.”



MBK has claimed it began preparing for corporate rehabilitation on February 28, following a downgrade of Homeplus’s credit rating. However, the financial watchdog believes this assertion is false and has uncovered evidence suggesting that discussions about potential insolvency began before the downgrade. Issuing debt when corporate rehabilitation is imminent can be deemed a fraudulent act if investors are not made aware, as such proceedings freeze financial liabilities.



According to FSS data submitted to the National Assembly’s Political Affairs Committee, as of March 3, Homeplus had issued 589.9 billion KRW (approx. $430 million) worth of financial products—including commercial paper (CP), short-term bonds, and asset-backed securities (ABSTBs) tied to card receivables. Of that amount, 197 billion KRW was sold to individual investors, and 311.9 billion KRW to general corporations. Notably, 82 billion KRW worth of ABSTBs were issued on a single day—February 25—just before the credit rating downgrade.



Even after referring the case to prosecutors, the FSS is expected to maintain pressure on MBK through further audits and inspections. The investigation has already been extended to MBK’s subsidiary investment advisory firm, Special Situations (SS). Additionally, the FSS has identified potential violations of accounting standards during Homeplus’s financial audit and has launched a compulsory review to examine the matter in depth.

 

 

 

[ⓒ AlphaBIZ. 무단전재-재배포 금지]