Lone Star Korea head
Yoo Hoe-won |
By Park Si-soo
Staff Reporter
Lone Star Korea head Yoo Hoe-won was cleared of charges of stock price manipulation at a Seoul appeals court, a ruling that could empower the U.S. equity fund to proceed with the sale of the Korea Exchange Bank (KEB) to HSBC Holdings.
The Seoul High Court reduced a lower court's sentence of five years imposed on Yoo to two-and-a-half years suspended for three years.
The court cleared Yoo of charges that he spread false rumors of a capital reduction at the KEB's credit card unit being imminent. ``Lone Star then had seriously considered reducing capital of KEB. The prosecutor's claim that Lone Star spread false rumors is not convincing,'' presiding judge Ko Yue-young said in the ruling.
The ruling gave hope to HSBC, which has offered Lone Star $6 billion to complete the purchase of KEB, the nation's fifth largest bank. However, it put pressure on Korean financial regulators that have been withholding approval of the sale.
Korea's financial regulator immediately announced it will nevertheless withhold approval for the KEB sale to HSBC as legal proceedings are not completely over. Korean regulators have pledged the stake sale won't be approved until outstanding legal issues have been solved to a level they find acceptable.
Lone Star welcomed the ruling.
``Lone Star is very gratified that the Seoul High Court has reversed the lower court's decision in the KEB stock price manipulation case, finding that Mr. Yoo and the other members of KEB's board of directors did not violate any laws in connection with KEB's rescue of KEB's credit card unit from the brink of bankruptcy,'' Lone Star said in a statement.
John Grayken, Chairman of Lone Star, also said, ``We maintained our innocence throughout this process, and are pleased today to have the court's confirmation. We hope that now we can all put this behind us and get back to business.''
Dallas-based Lone Star brought a controlling stake in KEB in 2003 for $1.2 billion. It's now trying to sell a 51 percent stake in KEB to HSBC Holdings PLC (HBC) for around $6 billion.
Prosecutors sought a 10-year prison sentence for Yoo on charges of driving down the share price of the card unit by spreading a rumor that a capital reduction of the card company was imminent, and allowing the bank to absorb it at below-market prices.
In the first ruling in February, Yoo was sentenced to five years and taken directly to prison from the courtroom.
pss@koreatimes.co.kr
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