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Korea Herald
28-04-2025
- Business
- Korea Herald
Homeplus, MBK Partners HQs raided over controversial short-term debt sale
Prosecutors carried out a search and seizure operation at the headquarters of Korea's second-largest supermarket chain, Homeplus, and its largest shareholder, private equity firm MBK Partners, on Monday, as part of an investigation into alleged fraud and violations of the Capital Market Act. The Seoul Central District Prosecutors' Office announced that officials were dispatched to secure financial records in order to trace the flow of funds as Homeplus' financial health began to deteriorate after MBK Partners acquired the supermarket in 2015, culminating in losses of approximately 200 billion won ($138 million) in 2023. The retailer decided to apply to enter a rehabilitation program at the Seoul Bankruptcy Court on March 4. The search and seizure operation was conducted on suspicion of soliciting bond investments while deceiving investors, according to the prosecution. Prosecutors suspect that both Homeplus and its major shareholder, MBK Partners, had advance knowledge of the retailer's credit rating downgrade, but they continued to issue a large amount of short-term bonds and abruptly filed for rehabilitation, transferring the losses to investors and putting some 19,000 employees, 6,000 suppliers and partners in jeopardy. On Feb. 28, the Korea Investors Service downgraded Homeplus' credit rating from A3 to A3-, citing weak profitability, excessive debt and increasing uncertainty about the company's mid- to long-term competitiveness. Investigators believe Homeplus and MBK were informed about the rating downgrade at least by Feb. 25, when they received a preliminary notice from the credit agency. Despite knowing the company's rating was likely to decline, Homeplus issued asset-backed short-term bonds worth 82.9 billion won through Shinyoung Securities on Feb. 25. The prosecution reportedly claimed that selling bonds to investors in anticipation of corporate rehabilitation could be considered fraud, as such rehabilitation puts a hold on the financial procedures related to the debt, including interest payments. Four stock brokerage houses, including Shinyoung Securities, filed criminal complaints against Homeplus executives, alleging fraud for selling bonds while being aware of the rating downgrade and the upcoming corporate rehabilitation on April 1. The Financial Supervisory Service previously announced in a briefing on April 24 that it had secured concrete evidence that Homeplus and MBK Partners had been aware of the downgrade and planned to file for corporate rehabilitation for quite some time. South Korea's financial watchdog conducted an inspection into potential irregularities in the Homeplus scandal starting in mid-March, transferring records related to the controversial short-term debt sale to the prosecution on April 21. Prosecutors are reportedly scheduled to investigate MBK Partners Chairman Kim Byung-joo, MBK Partners Vice Chairman and Homeplus co-CEO Kim Kwang-il, and Homeplus President and co-CEO Joh Joo-yun as suspects. Detailed information about the investigation process has yet to be announced.
Korea Herald
13-03-2025
- Politics
- Korea Herald
Bipartisan resolution welcomes Trump's second term, highlights joint efforts to denuclearize North Korea
The National Assembly on Thursday passed a bipartisan resolution in support of a strengthened alliance with the US and cooperation between the two allies for peace on the Korean Peninsula. The resolution, co-authored by People Power Party Rep. Kim Gunn and Democratic Party of Korea Rep. Kim Byung-joo, states that the South Korea-US alliance is one of the founding blocks for maintaining peace on the Korean Peninsula and a key pillar of global peace and prosperity. The resolution named denuclearization of North Korea as a shared goal that South Korea and the US are committed to achieving. The resolution welcomed the inauguration of the second Donald Trump administration in the US, and pledged efforts to support the bilateral cooperation across fields such as artificial intelligence, nuclear energy and trade. "The National Assembly will strive to fortify South Korea and the US' joint defense posture to consolidate peace on the Korean Peninsula and strive for a nuclear weapons-free Korean Peninsula, and expand cooperation in emerging security fields such as cyber and space," the resolution read. Pitching the resolution, the chair of the Assembly's foreign affairs committee, Rep. Kim Seok-ki, said the resolution was "proposed with bipartisan support for firm continuity of South Korea-US alliance" in light of North Korea's advancing nuclear and missile capabilities despite international sanctions.
