With the inauguration of the new administration, there is growing attention on how the government will approach corporate investigations. In his inaugural address, President Lee Jaemyung (61, 18th class of the Judicial Research and Training Institute) stated, "The Lee Jaemyung administration will be a pragmatic, market-oriented government." However, even before President Lee's election, companies had already reorganized their government relations teams in anticipation of the new administration. There are also expectations that the investigation into the MBK Partners (hereafter 'MBK') and Homeplus case, a representative issue affecting ordinary people's livelihoods, will accelerate.
The MBK·Homeplus case is considered a major issue involving the interests of small business owners and workers on a large scale, and it is expected to serve as a litmus test for the Lee Jaemyung administration's approach to corporate investigations. The ruling party has asserted MBK's responsibility in this matter since before the presidential election. Recently, it has also been reported that an additional parliamentary hearing is under consideration.
The Third Anti-Corruption Investigation Division of the Seoul Central District Prosecutors' Office (headed by Lee Seunghak) is investigating whether Homeplus and its largest shareholder, MBK, proceeded with issuing short-term bonds despite being aware of a credit rating downgrade. Prosecutors are also questioning Homeplus executives and employees about when they became aware of the downgrade and the process of filing for corporate rehabilitation.
On May 17, prosecutors conducted a search and seizure of MBK Chairman Kim Byungjoo, who arrived at Incheon International Airport from London, United Kingdom, and secured his mobile phone and other items. Through the Ministry of Justice, prosecutors imposed an overseas travel ban on Chairman Kim, and imposed travel restrictions on MBK Vice Chairman and Homeplus Co-CEO Kim Kwangil, as well as Homeplus CEO Cho Jooyeon.
On February 28, Korea Ratings and NICE Investors Service downgraded Homeplus's commercial paper and short-term bond credit ratings from 'A3' to 'A3-'. Four days later, on March 4, Homeplus filed for corporate rehabilitation with the Seoul Bankruptcy Court. In April, the Financial Supervisory Service concluded that MBK and Homeplus management had issued bonds and planned the rehabilitation filing despite being aware of the downgrade, and referred the case to prosecutors.
The rehabilitation process for Homeplus has been slow. On June 4, the day of President Lee's inauguration, the Homeplus labor union sent an open letter to President Lee, urging him to "put the protection of people's livelihoods and the national economy as the top priority and respond firmly" to resolve the situation. According to the Homeplus union, Homeplus is seeking to close 36 out of its 126 stores nationwide.
As MBK and Homeplus have not actively presented compensation measures for damages during the rehabilitation process, there is growing sentiment that the prosecution's investigation should be strengthened. The deadline for Homeplus to submit its rehabilitation plan has been extended to July 10. An attorney representing Homeplus bond investors stated, "There has been ample time for consultation since the rehabilitation process began, but MBK and Homeplus have not proposed a proper repayment plan," adding, "It is time to investigate whether they have a genuine intention to repay, or if they are using the rehabilitation process to avoid their debts."
Im Hyunkyung, Legal Times Reporter
※This article is based on content supplied by Law Times.
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