Kim Kwang-il (left), vice chairman of MBK Partners and co-CEO of Homeplus, speaks at an emergency hearing of the National Assembly's Political Affairs Committee on MBK Partners and Homeplus in March. [Yonhap]
Kim Kwang-il (left), vice chairman of MBK Partners and co-CEO of Homeplus, speaks at an emergency hearing of the National Assembly's Political Affairs Committee on MBK Partners and Homeplus in March. [Yonhap]

Prosecutors investigating MBK Partners executives over the Homeplus crisis summoned Kim Kwang-il, MBK Partners vice chairman and Homeplus co-CEO, for questioning Monday as a suspect. The session follows the first suspect-level questioning of Kim on Friday — the initial such session since the case was reassigned — with prosecutors calling him in again Monday.

Anti-Corruption Investigation Unit 2 of the Seoul Central District Prosecutors' Office, led by chief prosecutor Lee Sang-hyeok, began questioning Kim on Monday morning as a suspect on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud) and the Capital Markets Act.

Prosecutors had summoned Kim Jung-hwan, MBK Partners senior vice president, for several days of suspect-level questioning beginning July 20. Before that, Lee Seong-jin, an executive director at Homeplus, was questioned as a suspect in late June. Having worked through MBK Partners executives in succession, prosecutors are expected to question MBK Partners Chairman Kim Byung-ju — considered the figure at the top — before deciding whether to seek fresh arrest warrants and against whom.

MBK Partners and Homeplus executives are suspected of concealing Homeplus's financial difficulties and the likelihood of a credit rating downgrade while promoting asset-backed short-term bonds issued by Homeplus as safe products.

The Homeplus asset-backed short-term bonds are asset-backed securities collateralized by card receivables that credit card companies acquired after Homeplus used dedicated purchasing cards to buy goods. Shinyoung Securities issued the bonds, which Hana Securities and other brokerages then sold.

Korea Ratings downgraded Homeplus's credit rating from A3 to A3- in February last year. Homeplus filed for court receivership with the Seoul Bankruptcy Court in March of the same year, fueling allegations that the company had issued bonds with prior knowledge of the downgrade before receiving the first formal notification.

Shinyoung Securities, Hana Securities and others filed a criminal complaint against Kim and others with prosecutors 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. Anti-Corruption Investigation Unit 3 of the Seoul Central District Prosecutors' Office then took over the investigation.

Earlier, Anti-Corruption Investigation Unit 3 sought arrest warrants in January against four individuals — Chairman Kim Byung-ju, Vice Chairman Kim Kwang-il, Senior Vice President Kim Jung-hwan and Executive Director Lee Seong-jin — but the court rejected all of them. The Seoul Central District Prosecutors' Office subsequently reassigned the case to Anti-Corruption Investigation Unit 2 in February.


bell@heraldcorp.com