MBK Partners founder and Chair Michael Byung-ju Kim attends an audit held at the National Assembly in Yeouido, western Seoul, Oct. 14. (Lee Sang-sub/The Korea Herald)
MBK Partners founder and Chair Michael Byung-ju Kim attends an audit held at the National Assembly in Yeouido, western Seoul, Oct. 14. (Lee Sang-sub/The Korea Herald)

South Korean prosecutors requested a warrant Wednesday to arrest top executives of private equity giant MBK Partners, including Chairman Michael Byung-ju Kim, over its sale of troubled supermarket chain Homeplus.

Prosecutors suspect that the executives were aware of the possibility of a credit ratings downgrade while pushing ahead with the issuance of asset-backed short-term bonds in February last year. The management soon filed for court receivership for Homeplus, a move that resulted in losses for investors.

The Supreme Prosecutors' Office filed warrant requests for Kim, Homeplus CEO and MBK Vice Chairman Kim Kwang-il, MBK Vice President Kim Jeong-hwan and Homeplus CFO Lee Sung-jin on suspicion of breaching the Capital Markets Act and the Act on the Aggravated Punishment of Specific Economic Crimes.

The probe was launched after the Financial Supervisory Service, the country’s watchdog, transferred the case to prosecutors under a fast-track procedure in April.

Prosecutors conducted raids on the headquarters of Homeplus and MBK, as well as the residences of the top executives.

Last month, Chairman Kim and Vice Chairman Kim were summoned and questioned as suspects in connection with the case.

The FSS is continuing to look into MBK. In November, the watchdog notified the firm in advance that it would impose disciplinary measures, including a suspension of business operations.

Following reports that prosecutors had sought arrest warrants for its chairman and top executives, MBK denied the claims, saying it “categorically rejects all allegations underlying” the request.

The firm added that the request “reflects a fundamental misunderstanding of both the intent and actions of the controlling shareholder” of Homeplus, which was MBK.

In March, the Seoul Bankruptcy Court approved a court-led restructuring of Homeplus to avert bankruptcy, but the grocery retailer has yet to make progress in finding a new owner.


silverstar@heraldcorp.com