Korea Exchange Bank raided

Korean prosecutors have raided Korea Exchange Bank as part of continuing investigations aimed at unravelling irregularities surrounding the bank’s acquisition by Lone Star in 2003.

Korea’s Supreme Prosecutors office deployed about 30 personnel to raid the headquarters of Korea Exchange Bank on June 29 as part of its investigations into the sale of the bank to US private equity firm Lone Star in 2003.

“We decided to raid the the bank to investigate the dubious deals surrounding the sale of the bank in 2003,” prosecutor Chae Dong Wook said at a media briefing, according to a report by The Korea Times.

Prosecutors also searched the homes of former KEB President Lee Kang Won, former vice president Lee Dal Yong, both of whom are suspected to have colluded with officials to downgrade the bank’s financial status to help Lone Star acquire it at a bargain price, according to the same report.

Former deputy prime minister Lee Hun Jai, now an advisor at a law firm that helped the sale, also faces prosecutors’ summons.

The raid follows a three-month probe by state auditors concluding that Lone Star was an unqualified buyer of KEB because the bank’s poor financial condition had been exaggerated to allow the purchase by a non-strategic buyer. Normally non-strategic buyers are not allowed to acquire more than 10 percent of a South Korean lender.

Lone Star’s pending sale of the bank is subject to the results of the Korean prosecutors even though the firm was cleared of misconduct or an illegal doings by the auditors.