Lone Star’s nemesis took its money
The Seoul Central District Prosecutors’ Office said that Jang Hwa-sik, co-chairman of the civic group Spec Watch Korea, demanded more than 1 billion won ($917,000) from the former president of the American private equity firm’s Korean branch to halt his campaign against it.
According to prosecutors, Jang took 800 million won from Yoo Hoe-won, the former head of the now-disbanded Korean branch of Lone Star.
Prosecutors found evidence that Yoo wired the money to Jang’s account before an appeal court was to rule on whether Yoo was guilty of stock manipulation. Yoo hoped that Jang would halt his anti-Lone Star campaign, which he did.
In a stark turnaround, Jang sent a written plea to the appeal court in September 2011 asking for leniency for Yoo.
The prosecutors also discovered that Yoo agreed in a written statement to give Jang hundreds of millions of won on top of the 800 million won if he managed to receive a suspended prison term, although he didn’t.
The prosecution’s move against the activist came two days after they arrested him for alleged bribery.
During questioning, Jang acknowledged he took bribes and said he spent the money on sending his children overseas to study and investing in the stock market. The former Lone Star manager was also arrested on charges of bribery and is under questioning.
News reports on Jang sent shock waves through Korea’s lively civic group community, which adored Jang for his crusade against the Lone Star’s investment in KEB, from which it reaped 4.7 trillion won in profits (including dividends) over a nine-year period between 2003 and 2012.
Jang’s campaign against the private equity firm raised public anger over foreign investors coming into the Korean market and actually profiting in a big way.
The American private equity firm acquired KEB in October 2003 for 1.38 trillion won and sold it for a total of 5.1 trillion.
Jang, who was the leader of KEB’s labor union, claimed Lone Star purchased KEB at an undervalue price by manipulating the stock price of KEB’s credit card unit by spreading groundless rumors.
The Supreme Court found Yoo guilty of stock manipulation and sentenced him to three years in prison.
Lone Star’s business practices in Korea sparked criticism that it was only intent on reaping profits over a short period time with no plan to invest in the Korean market, what is referred to in Korea as an “eat-and-flee” tactic.
BY Lee YOO-JEONG, KANG JIN-KYU [email@example.com]