[Alpha Biz= Kim Jisun] South Korean prosecutors have summoned Kim Kwang-il, Vice Chairman of MBK Partners and CEO of Homeplus, for questioning over allegations of fraud and capital market violations involving the private equity firm’s handling of Homeplus’ financial distress.

According to legal sources on December 3, the Seoul Central District Prosecutors’ Office’s Anti-Corruption Division 3 (acting chief prosecutor Kim Bong-jin) questioned Kim the previous day as a suspect on charges including fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act.

MBK Partners, which acquired Lotte Card in 2019, is accused of mobilizing its affiliates to conceal Homeplus’ worsening financial condition and shifting losses onto general investors.

Since 2020, Homeplus has relied on corporate purchase card programs with Hyundai Card and Shinhan Card to improve liquidity—paying suppliers via card first and settling the balance with the card companies 30 to 45 days later.

However, when Homeplus faced a credit rating downgrade risk in 2022, MBK allegedly brought in its affiliate Lotte Card to launch a new corporate purchase card program. Lotte Card’s transaction volume for Homeplus surged from about 126.4 billion won in 2023 to roughly 795.3 billion won last year, a sixfold increase, which industry sources view as an abnormal expansion of credit exposure.

Prosecutors believe that MBK Partners and Homeplus executives were already aware of the impending credit downgrade and were considering filing for corporate rehabilitation, yet proceeded to issue ABSTB (Asset-Backed Short-Term Bonds) without disclosing these risks to investors—potentially constituting fraud.

 

 

 

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