Homeplus fraud pegged at $79M as MBK Chairman Kim faces warrant review

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Homeplus fraud pegged at $79M as MBK Chairman Kim faces warrant review

Published: 12 Jan. 2026, 19:00

Audio report: written by reporters, read by AI

MBK Partners Chairman Michael ByungJu Kim adjusts his glasses as he appears at a National Assembly hearing in Yeouido, western Seoul, on Oct. 14, over the scandal surrounding Homeplus. [YONHAP]

Prosecutors estimate that 116.4 billion won ($79 million) in alleged fraud was committed in relation to Homeplus as they move against the executives of major Korean private equity firm MBK Partners, the owner of the beleaguered retail chain.

The prosecution applied fraud charges to bonds issued starting Feb. 17, 2025, concluding that top figures in MBK Partners, including Chairman Michael ByungJu Kim, and Homeplus already knew by then that a credit rating downgrade was imminent.

The private equity denies the allegations.

An anti-corruption division at the Seoul Central District Prosecutors’ Office, led by Acting Chief Prosecutor Kim Bong-jin, detailed these findings in arrest warrant requests filed on Jan. 7 against Chairman Kim, MBK Vice Chairman and Homeplus CEO Kim Kwang-il, MBK Vice President Kim Jeong-hwan and Homeplus CFO Lee Sung-jin, according to sources in the local legal community.

The alleged fraud includes 106.4 billion won in asset-backed short-term bonds, known as ABSTB, and 10 billion won in commercial paper and short-term bonds.

Homeplus allegedly engaged in the issuance of 24.4 billion won in ABSTB through securities firms on Feb. 17, followed by 3 billion won in commercial paper on Feb. 18, 5 billion won in commercial paper and 2 billion won in short-term bonds on Feb. 21, and another 82 billion won in ABSTB on Feb. 25.

Members of a coalition formed to defend Homeplus workers hold a press conference in front of the Homeplus's Jamsil branch in Songpa District, southern Seoul, on June 2, 2025, voicing opposition to the planned closures of the Jamsil and Jayoung locations. [NEWS1]

Prosecutors suspect Homeplus went ahead with the offering of the bonds from Feb. 17 to Feb. 25 without disclosing the risk of a credit rating downgrade, causing losses to investors.

Credit rating agencies, including Korea Investors Service and Korea Ratings, downgraded Homeplus’ rating to A3- from A3 on Feb. 28, 2025. Homeplus filed for court-led rehabilitation on March 4.

After analyzing internal MBK documents, prosecutors concluded that MBK and Homeplus knew about the impending downgrade at least 11 days earlier, before Feb. 17. The investigation initially focused on whether the companies recognized the downgrade risk before the Feb. 25 ABSTB issuance. Prosecutors now believe they had that knowledge even earlier.

Prosecutors also identified circumstances indicating that MBK and Homeplus began preparing for corporate rehabilitation as early as 2023. MBK reviewed Homeplus’ worsening financial condition that year and considered rehabilitation after receiving management reports. The company ultimately avoided filing at the time by securing loans.

Ahead of filing the arrest warrants, prosecutors sought the Financial Supervisory Service's opinion late last year.

The warrant hearing will take place at the Seoul Central District Court at 10 a.m. on Jan. 13, presided over by Senior Judge Park Jung-ho. The court will examine whether MBK recognized the risk of rehabilitation and investor losses stemming from the credit rating downgrade in advance, and whether Chairman Kim received reports and issued directives.

MBK and Homeplus denied all allegations.
“We did not foresee a credit rating downgrade, nor did we prepare in advance for rehabilitation,” the companies said. “We fully deny all charges stated in the arrest warrants.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY JEONG JIN-HO [[email protected]]