Anti-Corruption Investigation Division 2 probes asset-backed short-term bond issuance

The Supreme Prosecutors' Office and Seoul Central District Prosecutors' Office in Seocho-gu, Seoul. [Yonhap]
The Supreme Prosecutors' Office and Seoul Central District Prosecutors' Office in Seocho-gu, Seoul. [Yonhap]

By Choi Eui-jong, The Herald Business

Prosecutors investigating MBK Partners executives in connection with the Homeplus crisis have questioned a Homeplus finance executive as a suspect — the first such interrogation since the case was reassigned. Having relaunched the investigation last month by questioning complainants and victims, prosecutors are now moving to interrogate suspects, signaling a notable acceleration of the probe.

The Anti-Corruption Investigation Division 2 of the Seoul Central District Prosecutors' Office — led by chief prosecutor Lee Sang-hyeok — summoned and questioned Homeplus finance executive "A" as a suspect on Tuesday. Prosecutors are understood to have focused on the issuance process of Homeplus asset-backed short-term bonds (ABSTB).

Prosecutors plan to continue questioning suspects, starting with A, before moving on to MBK Partners and Homeplus management. Earlier, the division's predecessor unit — Anti-Corruption Investigation Division 3 — had sought arrest warrants in January for four individuals: MBK Partners Chairman Kim Byung-ju, Vice Chairman Kim Gwang-il (co-CEO of Homeplus), Vice President Kim Jeong-hwan and Executive Director Lee Seong-jin. The charges included aggravated fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act. The court rejected all four warrants, stalling the investigation.

After the warrants were rejected, prosecutors reassigned the case in February. Three months later, in May, they summoned a Shinyoung Securities official for questioning as a complainant. On May 15, a credit rating analyst at Korea Ratings was called in as a reference witness. On May 19, an investor belonging to the emergency committee of victims of Homeplus purchase-dedicated ABSTB was questioned as a victim.

According to prosecutors, MBK Partners and Homeplus management are suspected of having anticipated the company's financial crisis and a potential credit rating downgrade, yet concealing that information while marketing Homeplus ABSTB as a safe product.

Homeplus ABSTB are asset-backed securities collateralized by card payment receivables that card companies acquired after Homeplus used purchase-dedicated cards to buy goods. Shinyoung Securities issued the Homeplus ABSTB products, while Hana Securities and other brokerages sold them.

Korea Ratings downgraded Homeplus's credit rating from A3 to A3- in February last year, and Homeplus filed for court receivership with the Seoul Rehabilitation Court in March of the same year. The sequence sparked controversy over whether the company had issued bonds with advance knowledge of the downgrade before receiving the initial notification.

Shinyoung Securities, Hana Securities and others filed a complaint with prosecutors against Vice Chairman Kim and others in April last year. The Financial Supervisory Service detected suspected fraudulent trading by MBK Partners and referred the case to prosecutors on a fast track.


bell@heraldcorp.com