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THE INVESTOR] Key suspects in Korea’s biggest stock price manipulation case are living a not-so-secret life in Hong Kong and Australia, while Korean prosecutors have made hardly any efforts to bring them to justice, an investigation by The Korea Herald has found.
The suspects are Derek Ong and Phillip Lonergan, two of the three former Deutsche Bank employees facing criminal charges in Korea in relation to a 2010 stock rout. Local authorities have failed to extradite the three -- nationals of the U.K., Australia and France -- for trial, citing their whereabouts as being unknown.
The Korea Herald, after a surprisingly brief and basic search, was able to contact Ong on his Hong Kong-registered mobile phone.
“I don’t work in the industry anymore,” Ong said, admitting that he is the Derek Ong who worked at Deutsche. Based on his continued use of the number and local sightings, the U.K. national appears to still reside in Hong Kong, where the alleged scam took place.
Getting an indication of Lonergan’s whereabouts was even easier.
On his LinkedIn account, the Australian introduces himself as pursuing a master’s degree in law at the University of Sydney.
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The twin tower skyscraper headquarters of Deutsche Bank AG stand at dusk in Frankfurt, Germany. Bloomberg |
The Seoul Southern District Prosecutor’s Office, when contacted by The Korea Herald on Friday, said it had no clue as to the whereabouts of either of the two. The spokesperson said the office was preparing to make a new request to the home countries of the three for cooperation.
“Since they are foreign nationals and don’t live in Korea, we depend on their respective country’s authorities for extradition. It takes time,” the spokesperson said.
The case, locally referred to as the “Nov. 11 Deutsche options shock,” is being tried at a Seoul court. The first guilty verdicts were handed down against the German bank’s Korean unit and a Korean employee in January. The Korean man was sentenced to five years in prison.
The trial for Ong, Lonergan and the third suspect, Bertrand Dattas, however, hasn’t had a single hearing yet, as none of the three have been brought to court.
Korean authorities’ initial requests for extradition, made after the trial began in Seoul in late 2011, were all rejected, the prosecution said.
According to the prosecution, the U.K. refused to cooperate, France said the whereabouts of Dattas were unknown, and Australia said the information provided by Korean authorities on Lonergan was incorrect or insufficient for it to proceed.
Korean prosecutors didn’t follow up on any of the issues.
“The trial for the trio is on hold due to the continued nonappearance of the defendants,” Seoul Central District Court’s spokesperson said.
In its ruling sentencing the Korean defendant to jail, the court said Deutsche Bank and its employees manipulated Korea’s stock market to gain profit from derivative positions they had built in advance.
Ong, as the head of an index arbitrage trading team in Deutsche Bank’s Hong Kong branch, is accused of leading the massive and coordinated selloff of Korean stocks by the team, worth 2.4 trillion won ($2.05 billion), which took place just 10 minutes prior to the stock market’s close in Seoul and wiped out 28 trillion won in value from Korea’s equity market. Deutsche made a profit of 44.9 billion won through the transactions.
Dattas, Ong’s subordinate, was responsible for the actual execution of the trades, while Lonergan was their superior, overseeing equity trading and risk control at the branch.
By Lee Sun-young & Park Han-na
(
milaya@heraldcorp.com)
(
hnpark@heraldcorp.com)
