MBK, Homeplus searched as executives face fraud investigation

Prosecutors raided the headquarters of Homeplus and MBK Partners on Monday, launching a criminal investigation over allegations of fraud related to the retailer’s March 4 corporate rehabilitation filing.

MBK, the private equity firm, became the largest shareholder of Korea’s second-largest supermarket chain after acquiring a full stake from Britain’s Tesco in 2015.

The raid came a week after the financial authorities referred the case to the prosecution through a fast-track process for expedited investigation.

The prosecutors suspect that MBK and Homeplus executives moved forward with issuing short-term bonds while concealing plans to seek corporate rehabilitation despite being aware of an impending credit rating downgrade.

Korea Ratings lowered Homeplus’s credit rating from A3 to A3- on Feb. 28, and the retailer filed for corporate rehabilitation with the Seoul Bankruptcy Court just four days later on March 4.

Homeplus and MBK are suspected of having been aware of the downgrade as early as Feb. 25, yet they proceeded with bond issuance in an apparent attempt to shift potential losses onto investors.

If proven true, the act could constitute fraudulent and unfair trading under relevant laws.

※ Please refer to the article: MBK, Homeplus searched as executives face fraud investigation – Korea Times