Lotte Card Headquarters Raided
MBK Chairman Kim Byungjoo Accused of Fraud and Other Charges
On July 14, prosecutors investigating Kim Byungjoo, chairman of the private equity fund MBK Partners, and the Homeplus management on charges including fraud, conducted a search and seizure at Lotte Card.
The Third Anti-Corruption Investigation Division of the Seoul Central District Prosecutors' Office (headed by Prosecutor Lee Seunghak) announced that it was carrying out a search and seizure at the Lotte Card headquarters in Jung-gu, Seoul, on this day, on suspicion of violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud) and the Capital Markets Act, among other charges.
Since 2020, Homeplus has secured cash flow by signing corporate purchase card contracts with Hyundai Card and Shinhan Card, paying suppliers in advance by card and then reimbursing the card companies 30 to 45 days later.
However, when faced with a credit rating downgrade crisis in 2022, MBK Partners mobilized its affiliate Lotte Card to sign a new corporate purchase card contract. Industry observers view the surge in Lotte Card usage from approximately 126.4 billion won in 2023 to about 795.3 billion won last year?a more than six-fold increase?as an abnormal expansion of credit provision.
Prosecutors believe that, during this process, Homeplus and MBK Partners executives were aware in advance of the impending credit rating downgrade and planned to file for corporate rehabilitation, but concealed this information and issued asset-backed short-term bonds (ABSTB) based on card receivables.
MBK Partners is suspected of having concealed Homeplus's financial crisis and shifted losses onto general investors by mobilizing affiliates after acquiring Lotte Card in 2019.
Previously, investors filed criminal complaints and accusations against Chairman Kim, Homeplus CEO Kim Kwangil, and Lotte Card officials with the Seoul Central District Prosecutors' Office.
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