U.S. Lone Star Funds has been suspected of omitting a significant document when it made a report to Korea’s financial regulator in March, an opposition lawmaker alleged.

Rep. Lim Young-ho of the Liberty Forward Party said a unit of Lone Star owns 130 golf courses worth about 3.7 trillion won ($3.36 billion) in Japan, demanding regulatory sanction against the buyout fund.

He called for the Financial Services Commission, which has been probing Lone Star’s shareholder eligibility, to order the fund to sell most of its stake in Korea Exchange Bank.

The nation’s banking laws ban an investor with its non-financial assets exceeding 2 trillion won from controlling a Korean bank.

According to the lawmaker and KEB unionized workers, the financial authorities failed to obtain the document from Lone Star.

On March 16, the FSC said in a statement it “believes that Lone Star is not a non-financial investor.” It added that an additional review of whether the fund satisfies the full requirement to become the majority shareholder of KEB would be needed.

The new allegations involving the golf courses in Japan could affect the FSC, while the regulatory body said on May 12 that it would indefinitely delay its ruling on the fund’s eligibility.

“I think Lone Star is a non-financial investor. It is illogical that the fund has been exercising voting rights for the parts of more than a 4-percent stake in KEB,” Lim was quoted by a broadcaster as saying.

Should the FSC rules that Lone Star is not a financial investor, the fund would be forced to dispose of 41 percent stake of the total 51.02 percent stake in the bank. And its voting right would be slashed to a maximum of a 4-percent stake.

Amid the situation, an FSC official issued a possibility that the regulator, which is waiting for the court’s coming verdict on the alleged stock manipulation of an executive of Lone Star in 2003, will also eventually choose to direct the fund to most of its KEB shares ― under a sanction of coercive sale against the disqualified shareholder.

While Hana Financial Group has made a preliminary contract to acquire the controlling KEB shares for 4.68 trillion won, the takeover price could be lowered to about 2 trillion won under the scenario of enforced sale.

Under the scenario, Lone Star could suffer unfavorable stock prices in sale as well as giving up premiums for handing over the KEB management right to Hana Financial.

By Kim Yon-se (kys@heraldcorp.com)