Critics call for regulator to reject Hana’s KEB takeover
The nation’s financial regulator has been under mounting pressure to take stern action against Lone Star Funds, which was convicted of manipulating stocks of Korea Exchange Bank’s credit card affiliate.
In particular, a group of lawmakers, professors and lawyers are calling for the Financial Services Commission to reject Hana Financial Group’s application to acquire KEB from Lone Star.
Their calls come amid speculation that the FSC may “simply” order the U.S.-based fund to dispose of its stake in KEB, a decision that could pave the way for Hana Financial to take over the shares.
If the regulator allows Lone Star to enjoy a huge management premium through the order, it could amount to abusing power and be subject to criminal investigation, a group of lawmakers said.
“(The FSC’s possible action) without taking punitive measures against Lone Star, which lost the status of KEB’s biggest shareholder due to its critical malfeasance, would be a practice committing a crime jointly,” an opposition lawmaker of the National Policy Committee in the National Assembly said.
Voices calling for tougher punitive measures are also coming from the Lawyers for a Democratic Society, a progressive association of lawyers. It is strongly calling for financial authorities not to approve the preliminary deal between Lone Star and Hana Financial.
Lawyers including Kwon Young-kook argued that the Hana-Lone Star deal has lost legal validity as the financial group signed a deal with an “ineligible” bank shareholder.
Citing similar cases related to ordering stake sales, the lawmakers and lawyers say the FSC should instruct the fund to dispose of its KEB shares to anonymous investors at market-determined prices on the stock market.
A group of professors including Jun Sung-in of Hongik University also says it is unnecessary for the regulator to review the application documents from Hana to absorb KEB as its subsidiary.
Unionized workers of KEB raised the issue of the neutrality of the FSC’s senior panel meeting, which is scheduled to fine-tune the coming action on Lone Star.
Out of the nine-member panel, three figures were closely involved in Lone Star’s takeover of KEB in 2003, the union said. They are FSC Chairman Kim Seok-dong, FSC Vice Chairman Choo Kyung-ho and FSC non-standing commissioner Shim In-sook, who worked for Lone Star’s attorney firm.
“There is a high possibility that they (the three figures) will try to conceal their faults by voting for the sake of Lone Star (in the coming panel meeting,” the union said.
The FSC is poised to make a final decision between simple instruction and punitive instruction at the coming penal meeting as early as next week.
There have been allegations that several FSC senior officials took the initiative in handing over KEB to Lone Star in 2003 by fabricating the bank’s BIS capital adequacy ratio.
During past parliamentary audits, a number of lawmakers from the Grand National Party and Democratic Party demanded the FSC excuse about the allegations while the regulator failed to give clear answers.
By Kim Yon-se
(
kys@heraldcorp.com)
