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]

Prosecutors investigating MBK Partners executives in connection with the Homeplus crisis questioned Kim Jeong-hwan, a vice president at MBK Partners, as a suspect Monday, as the probe picks up pace following the questioning of Homeplus executive vice president Lee Seong-jin late last month.

The Seoul Central District Prosecutors' Office's Anti-Corruption Investigation Unit 2, led by chief prosecutor Lee Sang-hyeok, summoned Kim for questioning Monday as a suspect. Prosecutors had already begun questioning suspects after the case was reassigned, having called in a Homeplus chief financial officer identified only as "A" on June 23.

Prosecutors also questioned Homeplus Executive Vice President Lee Seong-jin as a suspect late last month, according to sources familiar with the matter. However, MBK Partners Chairman Kim Byung-ju and MBK Partners Vice Chairman Kim Kwang-il have not yet been summoned for suspect questioning.

According to prosecutors, MBK Partners and Homeplus executives are suspected of having anticipated the retailer's financial difficulties and a potential credit rating downgrade, then concealing that information while promoting and issuing Homeplus asset-backed short-term bonds — known as ABSTB — as safe investment products.

The Homeplus ABSTB securities were backed by credit card receivables generated when Homeplus purchased goods using dedicated procurement cards. Shinyoung Securities issued the Homeplus ABSTB products, while Hana Securities and other brokerages sold them to investors.

Korea Ratings downgraded Homeplus's credit rating from A3 to A3- in February last year. The following month, Homeplus filed for court receivership at Seoul Bankruptcy Court. The sequence sparked controversy, with allegations that the company had issued bonds while aware a downgrade was coming — before it received the initial downgrade notification.

Shinyoung Securities and Hana Securities filed a criminal 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 basis. Anti-Corruption Investigation Unit 3 at the Seoul Central District Prosecutors' Office then took up the investigation.

Unit 3 sought arrest warrants in January against four individuals — Chairman Kim Byung-ju, Vice Chairman Kim Kwang-il, who also serves as Homeplus co-chief executive, Vice President Kim Jeong-hwan, and Executive Vice President Lee Seong-jin — on charges including 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 warrant requests. The Seoul Central District Prosecutors' Office subsequently reassigned the case to Anti-Corruption Investigation Unit 2.

In May, prosecutors summoned a Shinyoung Securities official connected to the Homeplus ABSTB case as a complainant for questioning. On May 15, they questioned a credit rating analyst from Korea Ratings as a reference witness. On May 19, they questioned an investor affiliated with the Homeplus ABSTB Victims' Emergency Response Committee as a victim.


bell@heraldcorp.com