Top court clears ex-finance official in Lone Star case

By Kim Eun-jung
SEOUL, Oct. 14 (Yonhap) -- The Supreme Court on Thursday acquitted a former
finance ministry official and two former Korea Exchange Bank (KEB) officials of
charges that they conspired with U.S. equity firm Lone Star to reduce the selling
price of the debt-laden bank in a controversial 2003 deal.
Prosecutors had indicted the former official Byeon Yang-ho, the bank's then chief
Lee Kang-won and vice president Lee Dal-yong for allegedly colluding with the
Texas-based equity firm to understate the bank's assets and inflate its debts
before selling it at a bargain price the prosecution estimates was as much as 825
billion won (US$743 million) below the true value.
Lone Star bought a 51 percent stake in KEB for US$1.2 billion in 2003 to take
over the nation's fifth-largest lender at the time.
Lone Star's deal to buy KEB followed the 1997 Asian financial crisis that hit the
nation, after which the South Korean government encouraged private equity funds
to take stakes in some of the country's troubled banks.
The lower courts cleared Byeon and the two former bank officials of breach of
trust, saying there was no evidence to prove prosecutors' charges.
In a separate case last year, the top court found Byeon not guilty of taking
bribes from Hyundai Motor to help the company write off its debt, while
convicting the former bank chief Lee for taking kickbacks from a contractor.
In June 2006, a South Korean government audit cleared Lone Star of any wrongdoing.
ejkim@yna.co.kr
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