Four senior executives, including MBK Partners private equity Chairman Kim Byung-ju, stand at a crossroads over possible arrest.
Park Jeong-ho, a warrant-exclusive Director General judge at the Seoul Central District Court, will hold a pre-arrest suspect questioning (substantive warrant review) starting at 10 a.m. on the 13th for Chairman Kim; Kim Kwang-il, MBK vice chairman and Homeplus Co. co-CEO; Kim Jeong-hwan, MBK senior vice president; and Lee Seong-jin, Homeplus Co. executive director.
The Anti-Corruption Investigation Division 3 of the Seoul Central District Prosecutors' Office (acting head prosecutor Kim Bong-jin) on the 7th sought arrest warrants from the court for them on charges including fraud and violations of the Financial Investment Services and Capital Markets Act.
Prosecutors believe Homeplus Co. and its major shareholder MBK issued 82 billion won in asset-backed short-term bonds (ABSTB) in Feb. last year while concealing an anticipated credit rating downgrade, then abruptly filed for corporate rehabilitation, causing losses to bond investors. Prosecutors judge that Chairman Kim and others were involved in the process.
The other three, including Vice Chairman Kim Kwang-il, face additional charges of accounting fraud, excluding Chairman Kim Byung-ju. Before Homeplus Co. applied to the court for corporate rehabilitation, the company transferred the redemption right holder of redeemable convertible preferred shares (RCPS) from the special purpose company (SPC) Korea Retail Investment to Homeplus Co., treated the liability as equity, and thus violated accounting standards.
Prosecutors also included in the arrest warrants that the three obstructed the work of a credit rating agency by failing to properly reflect Homeplus Co.'s difficult financial condition in the audit report.
MBK denies all charges cited in the arrest warrants and says it will explain in court. To that end, the defense is said to have prepared a presentation of more than 100 slides. The start time of the warrant hearing, originally set for 1:30 p.m. that day, was moved up by 3 hours and 30 minutes to 10 a.m. for that reason.
A decision on whether to arrest Chairman Kim and the others could come as early as late this afternoon.