A day before the court holds a pretrial detention hearing for four senior MBK Partners executives, prosecutors additionally alleged that three of them — Vice Chairman and Homeplus Co. Co-CEO Kim Kwang-il, MBK Senior Vice President Kim Jeong-hwan, and Homeplus Co. Executive Director Lee Seong-jin — obstructed the work of a credit rating agency.
According to legal sources on the 12th, the Seoul Central District Prosecutors' Office's Anti-Corruption Division 3 (acting chief prosecutor Kim Bong-jin) cited the charge of obstruction of business in the arrest warrant request for the three, including Vice Chairman Kim. The gist is that they harmed a credit rating agency by failing to include Homeplus Co.'s difficult financial condition in the audit report.
In addition to fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Financial Investment Services and Capital Markets Act, the three also face accounting fraud charges. Before corporate rehabilitation, when the right to redeem redeemable convertible preferred shares (RCPS) was transferred from the special-purpose company (SPC) Korea Retail Investment to Homeplus Co., they allegedly violated accounting standards by treating a liability as capital.
However, those charges were not applied to MBK Chairman Kim Byung-ju. The only charges applied to Chairman Kim are fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Financial Investment Services and Capital Markets Act.
Prosecutors believe that Chairman Kim and three other senior MBK executives anticipated a downgrade in Homeplus Co.'s credit rating, issued 82 billion won in asset-backed short-term bonds (ABSTB), and then abruptly filed for corporate rehabilitation, causing losses to investors.
Korea Ratings downgraded Homeplus Co.'s credit rating from "A3" to "A3-" on Feb. 28 last year, and four days later, in the early morning of Mar. 4 last year, Homeplus Co. filed for corporate rehabilitation with the Seoul Bankruptcy Court. As a result, the rehabilitation court issued a comprehensive stay order for Homeplus Co., and debt repayment was halted under court protection. Those who invested in the relevant bonds immediately suffered losses. Prosecutors view this entire sequence as a meticulously planned crime.
In particular, given that ABSTB was issued through a securities firm on Feb. 17 last year, prosecutors conclude they issued the bonds well in advance while anticipating a downgrade in the credit rating.
Meanwhile, the warrant review for the four MBK executives, including Chairman Kim, will be held at 10 a.m. on the 13th before Seoul Central District Court warrant judge Park Jeong-ho, Director General-level judge in charge of warrants.
In legal circles, the view is that for prosecutors to establish the need to detain the senior executives, including Chairman Kim, they must prove not just a vague awareness of deteriorating management conditions, but the specific timing and extent to which they recognized that repayment could become difficult due to a credit rating downgrade, and whether they actually took part in the process of issuing ABSTB thereafter.