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Prosecutors indict head of U.S. investment fund's South Korean unit

Prosecutors indict head of U.S. investment fund's South Korean unit

Prosecutors indicted the local head of a U.S. buyout fund Friday, part of a long-running probe that last year resulted in the cancellation of a multi-billion dollar bank sale.
Paul Yoo, head of Lone Star Advisors Korea, the South Korean unit of Lone Star Funds, was indicted on charges of stock price manipulation and tax evasion, prosecution spokesman Kang Chan-woo said.
Dallas, Texas-based Lone Star Funds purchased a controlling stake in 2003 in then distressed local lender Korea Exchange Bank.
Prosecutors, however, have probed the deal over allegations Lone Star colluded with the former management of KEB and government officials to paint the bank's financial health as being worse than it actually was in a bid to cut the purchase price.
Prosecutors have also investigated allegations that KEB and Lone Star were involved in manipulating the stock price of KEB's credit card unit in 2003 ahead of the bank's merger with it.
Lone Star Funds has consistently denied any wrongdoing, calling the accusations "politically motivated."
The case has drawn wide attention in South Korea, where suspicions of foreign investment funds, widely seen as out to make a quick profit at the expense of troubled local companies, runs deep.
Kang said Yoo's indictment on the charge of stock price manipulation was related to the merger with the credit card unit. He said the tax evasion charge involved an unrelated bond sale.
Lone Star Advisors had no comment on the indictment, said spokeswoman Kim Ji-ho. Calls to Yoo's attorney seeking comment went unanswered.
In November, Lone Star Funds, citing the probes, announced it was terminating a contract to sell its controlling stake in KEB to top lender Kookmin Bank in a deal valued at 6.95 trillion won (US$7.4 billion; euro5.7 billion).
Lone Star Chairman John Grayken at the time called prosecutors' accusations "groundless."
Also in November, a South Korean court issued arrest warrants for two U.S.-based Lone Star officials on charges of spreading false information to weaken the stock price of the KEB's credit card unit before the purchased by Lone Star.


Updated : 2021-04-24 01:45 GMT+08:00