MBK likely to face prosecution probe over Homeplus fiasco

MBK Partners is widely expected to face a prosecutorial investigation as early as this month over its involvement in the controversy surrounding Homeplus’ recent entry into court-led corporate rehabilitation, financial and industry officials said Friday.

Financial Supervisory Service (FSS) Gov. Lee Bok-hyun revealed Thursday that “meaningful facts” were uncovered during the watchdog’s inspection of MBK, prompting coordinated action with the prosecution and other related bodies.

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 Homeplus case revolves around claims that MBK knew about a potential credit rating downgrade before filing for court-led rehabilitation on March 4.

Suspicions have also grown that Homeplus issued short-term financial bonds despite anticipating the downgrade, putting investors at risk of losing their principal.

“Although our inspection into MBK in relation to the Homeplus case has not yet been concluded, we’ve already uncovered meaningful facts,” Lee said during a media briefing Thursday. “Based on this, we are in discussions with the prosecution and the Securities and Futures Commission (SFC) to implement the necessary actions.”

He added, “We have secured materials concerning the misconduct of multiple parties involved, as well as issues raised in the market. I expect we will be able to take prompt action within this month.”

Although he did not specify the type of the measures, it appears that authorities are considering referring the case to the prosecution through a fast-track process for expedited investigation, rather than filing a formal complaint through the SFC — a process that typically takes more than a month.

MBK maintains that it had no prior knowledge of the credit rating downgrade before it was confirmed on Feb. 28 and claims that the decision to seek court protection was only made after that date.

However, the FSS suspects the company may have had advance knowledge of the downgrade and has been inspecting MBK, Homeplus, related credit rating agencies and a securities firm since early March.

※ Please refer to the article: MBK likely to face prosecution probe over Homeplus fiasco – Korea Times