Prosecutors Summon Kim Byungjoo, Chairman of MBK Partners, Over 'Homeplus Scandal' Investigation

Questioned as a Suspect on Fraud Charges
Prosecutors Probe Prior Knowledge of Credit Rating Downgrade

Kim Byungjoo, Chairman of MBK Partners, is listening to questions from lawmakers during the National Assembly's Political Affairs Committee audit on the Fair Trade Commission and the Personal Information Protection Commission held on October 14.

Kim Byungjoo, Chairman of MBK Partners, who is suspected of concealing Homeplus's financial crisis and shifting losses onto general investors, was summoned and questioned by prosecutors.

According to the legal community on December 10, the Seoul Central District Prosecutors' Office's Anti-Corruption Investigation Division 3 (headed by Acting Chief Prosecutor Kim Bongjin) summoned Chairman Kim on December 8 as a suspect on charges of fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act.

Prosecutors reportedly questioned Chairman Kim on whether MBK had prior knowledge of Homeplus's credit rating downgrade, whether there were any reports or approvals regarding the issuance of short-term bonds, and whether they anticipated investor losses.

Since 2020, Homeplus has secured cash flow by signing corporate purchase card contracts with Hyundai Card and Shinhan Card, paying suppliers with 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 brought in its affiliate Lotte Card to sign a new corporate purchase card contract. Industry observers view the more than sixfold surge in Lotte Card usage-from about 12.64 billion won in 2023 to about 79.53 billion won last year-as an abnormal expansion of credit extension.

Prosecutors suspect that Homeplus and MBK management issued large-scale short-term bonds while being aware of Homeplus's credit rating downgrade, and then abruptly filed for corporate rehabilitation, causing losses to investors.

Prosecutors believe that during this process, Homeplus and MBK Partners management were aware in advance of the credit rating downgrade and planned 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).

The prosecutors received the case from the Financial Supervisory Service through a fast-track (emergency measure) process and in April conducted searches and seizures at the headquarters of Homeplus and MBK, as well as the residences of Chairman Kim, Vice Chairman and Homeplus Co-CEO Kim Kwangil, and Homeplus CEO Cho Jooyeon. Recently, Vice Chairman Kim was also summoned and questioned as a suspect.