Prosecutors question MBK Partners VP over alleged fraud in Homeplus financial scandal

South Korean prosecutors have summoned Kim Jung-hwan, a vice president at MBK Partners, for questioning as a suspect in an investigation into alleged fraud surrounding the financial troubles of retail giant Homeplus. The Seoul Central District Prosecutors' Office is examining claims that Homeplus and its management, including MBK Partners executives, deliberately promoted asset-backed commercial paper (ABCP) as a safe investment while anticipating the company's financial distress and credit rating decline.

The investigation, led by the Anti-Corruption Investigation Division 2, follows similar questioning of Lee Sung-jin, a former executive director at Homeplus, last month. While the arrest warrants for MBK Partners Chairman Kim Byung-joo and Homeplus co-CEO Kim Kwang-il were previously rejected by the court, which cited insufficient evidence for detention, the probe continues. The court had acknowledged the severity of the alleged financial damage but deemed the existing evidence insufficient for arrest.

Victims and securities firms allege that MBK Partners and Homeplus executives allowed the issuance of ABCP even when they knew that debt repayment would be difficult due to the impending corporate restructuring. Shinhan Investment and Hana Securities, among three other securities firms that issued ABCP for Homeplus in April last year, have filed fraud lawsuits against Homeplus management. The case was recently reassigned to the anti-corruption division after the initial rejection of arrest warrants.