Korean Job Discussion Forums

[JeJuJitsu]

Lone Star's Short Faces Extradition to South Korea (Update3)

By Sangim Han and William Sim

Nov. 16 (Bloomberg) -- Lone Star Funds co-founder Ellis Short faces an extradition request by South Korean prosecutors after a Seoul court issued a warrant seeking his detention over the buyout firm's management of the nation's fifth-largest bank.

The Seoul Central District Court today issued warrants against Short and the Dallas-based firm's general counsel in Korea, Michael Thomson, the court said in a four-page statement today. ``We have judged the applications meet the conditions needed to seek extradition of criminals,'' it said.

``We have offered repeatedly to come to Korea for questioning, as long as we are allowed to leave,'' Short said in an e-mailed statement. ``It is up to the prosecutors to decide whether they really want to determine the truth in this investigation, or simply want to try to intimidate us.''

An extradition request might deter overseas companies in Asia's third-biggest economy, where foreign direct investment has fallen to a 26-year low. Prosecutors are investigating Lone Star's acquisition and management of Korea Exchange Bank, stalling an agreement to sell the firm for a $4 billion profit.

``This issue of nationalism has been around for some time in South Korea,'' said Bruce Gale, a Singapore-based political risk consultant. ``I wonder whether countries can afford to continue doing this sort of thing when they face increasing investment competition.''

The Seoul court, which had rejected two earlier prosecutor requests for detention warrants on Short and Thomson, refused to issue arrest warrants for Paul Yoo and Cheong Heon Choo, who head Lone Star's Korean units.

`Conspiracy Theories'

The Supreme Prosecutors' Office ``has nothing more than unsupported conspiracy theories, but continues to insist that they should nevertheless put people in jail in order to question them,'' John Grayken, the other co-founder, said in a statement distributed by PRNewswire yesterday. ``We will continue to defend our personnel and our organization against this spurious attack.''

http://www.bloomberg.com/apps/news?pid=20601087&sid=afJRgWnOzUPQ&refer=home





This LoneStar story is making the rounds of the NYTimes, all the Financial channels, has even made some TV talk show talking points, basically, all saying to "not do business with South Korea" as by and large, all the financial experts agree, simply railroading by-the-book business men, who have never been known to have participated in any shady business practices. Had Korea's prosecutor's looked hard enough, chances are they could have found SOME businessman doing business in SK with a questionable reputation--but basically, Korea is picking on the WRONG guys. Essentially, lots of people are saying Korea's prosecutor's are absolutely stupid to pick on "choir boys."

[Hater Depot]

I haven't followed this story as closely I would like to, but from what I can tell nobody wanted to buy KEB before Lone Star. They probably twisted some elbows and bent a few rules -- but KEB might not exist today if they hadn't.

It's a bit like blaming the 97-98 crisis on the IMF.

[dulouz]

The evidence they are relying on is some chat about news about some change to the credit card. The prosecution is saying they floated rumors before a stock sale with the intention of influencing the stock price. I read this in the Herald and even with the paper's bias, they didn't forward as much detail as they usually do, likely because they didn't have any. The prosecution was having a hard time getting its warrants through the judges. I'm no fan of corporate raiders but from what I have I read, there wasn't too much dastardly behavior going on. The amount of money they made here insulted the Koreans and worse they paid no taxes/extorsion on it. They've agreed to give some money to charities to make this thing go away but the Koreans egos are on the line. Thats the crime.

[Nambucaveman]

I have to agree, the whole thing is extremely bias. The newspaper articles make it sound like the Lone Star executives are wanted criminals. The other part of that story is the value of KEB has gone up, therefore Lone Star is trying to get KB to pay more for KEB.

Also check out the editoral last week by Micheal Breen. If I can find it, I'll post it.

NC

[Nambucaveman]

Here is the article by Micheal Breen:

What Does the Evidence Say?
By Michael Breen

Like most people in the era of DVDs and 100 satellite channels, I only watch one or two television programs regularly. One is ``C.S.I.��

The program�s stars are crime scene investigators. With their police cameras and lab coats, you�d expect them to be nerds. But they are heroes, front line troops in the war on crime. What makes them so is the code by which the war is conducted. According to the American philosophy of justice, people are innocent until proven guilty and the state is required to assess guilt by objective evidence, not by confession.

Korean prosecutors could learn from it.

Take the Lone Star case. Last week, prosecutors requested an arrest warrant for Paul Yoo, head of Lone Star�s office in Korea, and detention warrants for Ellis Short, vice chairman, and for Michael Thomson, general counsel. The fund executives are suspected of stock price manipulation.

Seoul District Court Judge Min Yeong-hun rejected the request, saying prosecutors failed to provide evidence. This did not mean that prosecutors could not question the executives _ they don�t need to produce evidence for that. Rather, it meant that, in the court�s opinion, the evidence did not justify issuing arrest and detention warrants.

Normally, in such a case, prosecutors would continue with their case without arresting anyone at this stage. Or they would collect more evidence and submit a new request.

Instead, they threw a temper tantrum

http://times.hankooki.com/lpage/opinion/200611/kt2006111619251454330.htm