By Kim Rahn
Staff Reporter
Prosecutors Thursday banned Lone Star Chairman John Grayken from leaving the country in order to question him over allegations that the government sold the Korea Exchange Bank at a below market price to the U.S. investment fund back in 2003.
The prosecution declined to confirm how long the restriction will be imposed on him, saying they cannot comment on a case under investigation.
Grayken arrived in Korea late Wednesday night to testify in a Seoul court as a witness in a stock price rigging case involving Lone Star's Korean branch.
Prosecutors said they plan to question Grayken early next week to verify whether there were irregularities in the procedures of the fund's acquisition of a controlling stake in KEB in 2003. South Korean lawmakers and civic groups have alleged that the government sold the bank to the fund at a price that was far lower than the bank's actual worth.
U.K.-based HSBC Holdings late last year signed a deal with Lone Star to take over KEB. But the sale needs approval from regulators who have said that the sale should follow the clearance of all suspicion surrounding the government's sale of KEB to Lone Star.
The Texas-based firm chief arrived here around 11:30 p.m. on his private jet from Japan.
He will take the witness stand in the trial of Paul Yoo, president of Lone Star Advisors Korea, at a hearing on Friday. Yoo has been charged with manipulating stock prices in the merger of the Korea Exchange Bank and its credit card unit.
``I'm here voluntarily at the request of lawyers defending Paul Yoo to testify on his behalf at trial,'' Grayken told reporters at Incheon International Airport upon arrival.
When asked whether the Korean prosecution would ban him from leaving the country, Grayken said, ``It's not appropriate for me to say anything more at this time. I'll be able to comment after my testimony.''
Yoo and other Lone Star executives allegedly manipulated the credit card unit's stock price in November 2003 by spreading rumors about a capital reduction to push down the card company's stock price to cut merger costs.
Prosecutors suspended indicting Grayken as he was not in Korea. Before coming here, the company asked the prosecution to guarantee his departure as a prior condition of his entry.
The prosecution plans to summon him for questioning after he testifies at the trial.
``We did not make any agreement with Lone Star about Grayken's departure or overseas travel ban. We'll arrange a summons date with the company lawyers after the hearing,'' a prosecutor at the Supreme Prosecutors' Office said.