Suspected of Violating the Capital Markets Act as a "Suspect"
Allegations of Concealing Homeplus's Financial Crisis
Kwangil Kim, CEO of Homeplus (left), is responding to a lawmaker's question during the National Assembly's Political Affairs Committee audit on the Fair Trade Commission and the Personal Information Protection Commission held on October 14. The second from the left is Byungjoo Kim, Chairman of MBK Partners.
The prosecution, which is investigating Byungjoo Kim, Chairman of MBK Partners, and the management of Homeplus on charges including fraud, has summoned and questioned Kwangil Kim, Vice Chairman of MBK Partners and CEO of Homeplus.
According to the legal community on December 3, the Seoul Central District Prosecutors' Office's Anti-Corruption Division 3 (Acting Chief Prosecutor Kim Bongjin) summoned Vice Chairman Kim the previous day as a suspect on charges of violating the Act on the Aggravated Punishment of Specific Economic Crimes (fraud) and the Capital Markets Act.
MBK Partners is under suspicion of having concealed Homeplus's financial crisis after acquiring Lotte Card in 2019 by mobilizing its affiliates, and of shifting the losses onto general investors.
Since 2020, Homeplus has secured cash flow by signing corporate purchasing card contracts with Hyundai Card and Shinhan Card, paying suppliers with the cards first and then settling the amount with the card companies 30 to 45 days later.
However, when faced with a credit rating downgrade crisis in 2022, MBK Partners used its affiliate Lotte Card to sign a new corporate purchasing card contract. Industry observers view the more than sixfold surge in Lotte Card usage-from approximately 12.64 billion won in 2023 to about 79.53 billion won last year-as an abnormal expansion of credit provision.
The prosecution believes that, during this process, the management of Homeplus and MBK Partners were aware in advance of the impending credit rating downgrade and were planning to file for corporate rehabilitation, but concealed this fact and issued card payment-based asset-backed short-term bonds (ABSTB; Asset-Backed Electronic Short-Term Bonds).
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