Ham Yong-il, Deputy Director, "Discovered Circumstances Different from Homeplus Explanation... Switching to Accounting Audit"

The Financial Supervisory Service (FSS), which has launched a comprehensive investigation into Homeplus and its major shareholder MBK Partners over bond fraud issuance, confirmed that circumstances differing from the company's explanations were found during the corporate rehabilitation procedure (court receivership) application process. Violations were also identified during the accounting review, leading to a transition to a mandatory audit investigation starting this week.

Yonhap News

Ham Yong-il, Deputy Director of the Capital Markets and Accounting Division at the FSS, stated during a briefing at the FSS office in Yeouido on the morning of the 1st, "There has been meaningful progress, including the discovery of circumstances that differ from the explanations provided by MBK Partners and Homeplus regarding the possibility of credit rating downgrades, the background of the rehabilitation application, and the application itself." Since the end of last month, the FSS has launched a task force (TF) to respond to the Homeplus situation and is conducting a comprehensive investigation to determine whether Homeplus issued short-term bonds despite planning rehabilitation.

Deputy Director Ham evaluated that, contrary to MBK Partners' claim that they were unaware of the credit rating downgrade in advance and that the preparation for Homeplus's court receivership application began on February 28, "it is highly likely that they recognized the downgrade earlier." He explained, "If the charge of bond fraud issuance is confirmed, fraudulent transactions similar to previous cases like Dongyang could be established," adding, "then criminal penalties could also be possible." When asked whether there are plans to cooperate with the Financial Services Commission and others for future compulsory investigations, he left the possibility open, saying, "If necessary, there are compulsory measures."

He also explained, "Regarding the accounting review, there is a possibility of violation of processing standards," and added, "We have switched to an audit investigation from this week to examine the matter more thoroughly." In this case, it is possible to summon auditors and conduct a deeper investigation, which could lead to sanctions.

Deputy Director Ham also pointed out that Homeplus and MBK Partners should demonstrate responsible behavior. He criticized, "Although they claim to be sequentially paying off trade debts, uncertainty about repayment timing and priority continues to cause anxiety among partner companies and tenants," and added, "They are consistently maintaining ambiguous arguments while not paying rent for stores." He urged, "Even now, Homeplus should concretely present full repayment as promised to restore trust among stakeholders and the market," emphasizing, "The FSS will also mobilize all available capabilities to thoroughly investigate various suspicions, including fraudulent transactions."

Regarding Hanwha Aerospace's rights offering, he confirmed that it will proceed according to principles. Deputy Director Ham explained, "We have requested corrections because we judged that the information necessary for investors' rational decisions was insufficient," and added, "The review is consistently conducted based on the fundamental principles of disclosure to protect investors." Concerning the investigation of Sambutogeon, he mentioned, "We are allocating resources and personnel with the goal of completing it within April."

During the briefing, questions were also raised about the position of FSS Governor Lee Bok-hyun in relation to Prime Minister and Acting President Han Duck-soo's exercise of the right to request reconsideration (veto) of the amendment to the Commercial Act. Governor Lee, who has about two months left in his term, has opposed the exercise of the veto and has stated he would "stake his position" on the matter. Deputy Director Ham responded, "I cannot answer regarding his position," and dismissed the question by saying, "I have nothing particular to say."