Lone Star Case Embarrasses Lee
By Kim Yon-se
Korea Times Correspondent
NEW YORK ― President Lee Myung-bak encouraged American CEOs to invest more in Korea, Wednesday, but chose not to answer when they asked him about his stance on Lone Star Funds.
The Texas-based buyout fund has been barred from selling its controlling stake in the Korea Exchange Bank (KEB) to HSBC, due to ongoing court proceedings on its questionable takeover of KEB in 2003. A memorandum of understanding on the deal signed by Lone Star and HSBC expires late April.
During his luncheon meeting with the chairmen of global investment banks, a participant expressed discontent, urging the Korean government to resolve the issue in line with Lee's pledge to attract active foreign investment.
Citing Lee's remarks that the new administration would ease corporate regulations to make Korea a destination favorable to foreign investors, the CEO said the situation in which the Lone Star issue remains unsettled is a problem.
Another CEO said he thinks that Koreans have a hostile attitude to foreigners reaping huge gains via investments in ailing Korean companies.
Kim Choong-soo, senior presidential secretary for economic affairs, replied in lieu of the President: ``We thought that it would be inappropriate for a head of state to answer this question,'' he said.
Kim told the participants: ``We're also displeased with the lingering issue. We hope effective measures will be found to conclude the Lone Star issue.''
Lone Star was recently found guilty of stock price manipulation involving its acquisition of KEB's credit card unit.
After the Seoul Central District Court handed down the verdict, financial regulators said they will delay making any decisions on whether to approve its planned sale of KEB to HSBC until a final ruling on ``another case'' involving the buyout fund.
The CEOs' questions followed Lee's delivery of a keynote speech in English at the Korea Investment Forum 2008, held in Manhattan, New York, before his departure for Washington, D.C.
``Excessive regulations are always the biggest barrier to business activities of both foreign and domestic companies,'' he said. ``The reality is urging me to put the highest policy priority on regulatory reforms.''
Lee said he envisions the construction of a Global Korea, with global standards in every corner of society to ensure a business-friendly environment.
The government will drastically overhaul labor sector practices, saying many foreign investors perceive labor relations as a big stumbling block to investing in Korea, he added.
Reiterating that his administration is also considering clinching free trade agreements with China and Japan, he said, ``As part of efforts to create a business-friendly environment, Korea has been actively engaging in FTAs.''
Lee is to hold a summit with President George W. Bush at Camp David, the presidential retreat, on April 18-19.