Prosecutors Question Homeplus Finance Executive in 'Homeplus Incident' Probe

Prosecutors have summoned a finance executive from the South Korean retail giant Homeplus for questioning as a suspect in the ongoing "Homeplus incident." This marks the first such action since the investigation was reassigned to the Seoul Central District Prosecutors' Office's Anti-Corruption Investigation Division 2.

The executive, identified as 'A', was questioned regarding the issuance process and details surrounding Homeplus's electronic short-term corporate bonds (also known as 'jeondanche'). Prosecutors are investigating allegations that MBK Partners, the private equity firm that owns Homeplus, deliberately issued these bonds while aware of the company's deteriorating credit rating. The suspicion is that this was done to shift losses onto investors before a potential corporate restructuring or bankruptcy filing.

This investigation stems from a complaint filed by a corporate investor group, the Emergency Response Committee for 'Jeondanche' Victims. Prosecutors believe that MBK Partners executives may have issued short-term bonds before receiving the first notice of credit rating downgrade in February last year, intending to pass on losses to investors. This led to previous searches and seizures of Homeplus headquarters, MBK headquarters, and the residences of key MBK figures, including Chairman Kim Byung-ju and Vice Chairman Kim Kwang-il.

The case has faced challenges, including the denial of arrest warrants for Kim Byung-ju, Kim Kwang-il, and two other MBK Partners executives in January on charges of fraud and violations of the Capital Markets Act. The lack of significant progress prompted the reassignment of the case from the Anti-Corruption Investigation Division 3 to Division 2 in February, indicating a renewed push to uncover the facts surrounding the alleged investor fraud.