The head of a private investor watchdog has been arrested on charges of taking bribes from Lone Star Funds in return for keeping quiet about its controversial sale of a local bank in 2012, prosecutors said Wednesday.
Jang Hwa-sik, chief of Spec Watch Korea, which monitors what it calls speculative foreign investors, was arrested a day earlier on charges of professional negligence, the Seoul Central District Prosecutors' Office said.
Jang is suspected of having taken hundreds of millions of won (hundreds of thousands of dollars) from the American private equity firm under the table in the fall of 2011.
In 2012, Lone Star sold Korea Exchange Bank, which it bought for 1.38 trillion won nine years earlier, reaping a huge profit of 4.7 trillion won. Lone Star was later convicted by a South Korean court of buying the bank for under market value by manipulating its share prices.
Lone Star likely chose to bribe Jang since he had been actively lobbying against the deal between the Texas-based firm and Hana Financial Group Inc., South Korea's third-largest bank by assets, according to prosecutors.
Prosecutors said they have seized computer hard disks and cell phones from Jang's home to confirm the allegations.
A request for a formal arrest warrant will be filed if significant evidence proving the crime is found, prosecutors added. (Yonhap)
