Korean Supreme Prosecutor’s Office has succeeded in its third application for warrants to arrest Ellis Short, co-founder and vice-chairman of Lone Star, and Michael Thompson, the firm’s general counsel.
The court issued warrants to arrest the two US-based Lone Star executives on charges of manipulating stock prices of Korea Exchange Bank’s credit card unit in 2003, according to local Yonhap news agency.
The court rejected, however, the prosecutors’ application to detain Paul Yoo How-Won, head of Lone Star Advisors Korea, and Jeong Heon-Ju, former head of the private equity firm’s Seoul office. Jeong has been accused of tax evasion.
Yoo and his US colleagues are suspected of stock price manipulation in November 2003, which paved the way for Korea Exchange Bank to absorb the credit card unit.
This is alleged to have taken place after the bank was taken over by Lone Star, which is poised to make more than $4 billion in profit from an agreed sale to Kookmin Bank. The lucrative transaction has been held up by prosecutors’ investigations into the bank’s sale in 2003.
John Grayken, chairman of Lone Star said prior to the court making its decision the Supreme Prosecutor’s Office third application in three weeks to arrest and detain the firm’s senior executives was ‘outrageous.’
“The SPO still has nothing more than unsupported conspiracy theories, but continues to insist that they should nevertheless put people in jail in order to question them.”
On 15 November, the court issued an arrest warrant for Ha Jong-sun for his former involvement as a legal advisor for Lone Star, on charges that he accepted $1.05 million for supporting the 2003 Korea Exchange Bank acquisition.
The court rejected yesterday the prosecution’s simultaneous request for an arrest warrant for Byeon Yang-ho, the head of buyout firm Vogo, on allegations that he colluded to manipulate the bank’s financial health to enable the sale to Lone Star.
Byeon Yang-ho was then head of Korea’s finance ministry Financial Policy Bureau.