Seoul should surmount higher hurdle to defeat US buyout fund
Hana Financial Group has won a complete victory in a $1.4-billion international arbitration suit against Lone Star Funds over the purchase of KEB Hana Bank, formerly known as the Korea Exchange Bank (KEB). It said Wednesday that the International Court of Arbitration (ICA) under the International Chamber of Commerce (ICC) had informed Hana of the ruling in its favor on all counts.
The ICA finding for Hana Financial is significant in that the ruling has recognized and exposed the U.S. buyout fund's greed to the world. The ill-fated relations among the Seoul government, Lone Star and Hana Financial go back to 2006. In March that year, the National Assembly filed a charge against Lone Star with the prosecution concerning the suspected sale of KEB Hana Bank for an unreasonably low price.
In 2011, the Supreme Court finally issued a guilty verdict on Lone Star on the charge of manipulating the stock price of KEB's credit card unit to buy the bank at a much cheaper price. While the trial was ongoing, Lone Star signed a deal to sell its 51.02-percent stake in KEB to Hana for 4.68 trillion won ($3.92 billion). There were several price adjustments later to reduce the final price by 773.2 billion won. The National Tax Service also collected a withholding tax of 391.6 billion won.
The ruling prompted the Texas-based private equity fund to file for a 5.3-trillion-won investor-state dispute (ISD) arbitration claim against the Korean government in 2012.
Experts are divided over the effect the ICA ruling will have on the ISD ruling, which will come as early as next month. Some say it will help the government by revealing Lone Star's unwarranted claims and greed. Others, however, warn against complacency, noting that the ICA and ISD cases are quite different in terms of priority and process.
We hope the government will mobilize all means and resources available to win the case against Lone Star, which has long been notorious here for its ruthless and predatory pursuit of windfalls.
Hana Financial Group has won a complete victory in a $1.4-billion international arbitration suit against Lone Star Funds over the purchase of KEB Hana Bank, formerly known as the Korea Exchange Bank (KEB). It said Wednesday that the International Court of Arbitration (ICA) under the International Chamber of Commerce (ICC) had informed Hana of the ruling in its favor on all counts.
The ICA finding for Hana Financial is significant in that the ruling has recognized and exposed the U.S. buyout fund's greed to the world. The ill-fated relations among the Seoul government, Lone Star and Hana Financial go back to 2006. In March that year, the National Assembly filed a charge against Lone Star with the prosecution concerning the suspected sale of KEB Hana Bank for an unreasonably low price.
In 2011, the Supreme Court finally issued a guilty verdict on Lone Star on the charge of manipulating the stock price of KEB's credit card unit to buy the bank at a much cheaper price. While the trial was ongoing, Lone Star signed a deal to sell its 51.02-percent stake in KEB to Hana for 4.68 trillion won ($3.92 billion). There were several price adjustments later to reduce the final price by 773.2 billion won. The National Tax Service also collected a withholding tax of 391.6 billion won.
The ruling prompted the Texas-based private equity fund to file for a 5.3-trillion-won investor-state dispute (ISD) arbitration claim against the Korean government in 2012.
Experts are divided over the effect the ICA ruling will have on the ISD ruling, which will come as early as next month. Some say it will help the government by revealing Lone Star's unwarranted claims and greed. Others, however, warn against complacency, noting that the ICA and ISD cases are quite different in terms of priority and process.
We hope the government will mobilize all means and resources available to win the case against Lone Star, which has long been notorious here for its ruthless and predatory pursuit of windfalls.
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