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Kim Byung-ju, Chairman of MBK Partners, enters the Seoul Central District Court in Seocho-gu, Seoul, on Jan. 13 for a pretrial detention hearing over fraud allegations worth approximately 100 billion won related to the “Homeplus scandal.” (Photo courtesy of Yonhap News) |
[Alpha Biz= Kim Jisun] According to an exclusive report by The Seoul Economic Daily, executives of MBK Partners, including Chairman Kim Byung-ju, who faced possible detention over the so-called “Homeplus scandal,” argued during a pretrial detention hearing that they needed to remain out of custody in order to continue paying employee wages. However, on the same day their arrest warrants were dismissed, Homeplus announced internally that it would be difficult to pay January salaries on time.
The Seoul Central District Court conducted a pretrial detention hearing on Jan. 13 for Chairman Kim, Homeplus CEO Kim Kwang-il (also Vice Chairman of MBK Partners), and two other executives. In the early hours of Jan. 14, Senior Judge Park Jeong-ho dismissed the prosecution’s request for arrest warrants.
During the hearing, Chairman Kim and Vice Chairman Kim emphasized the necessity of a non-custodial investigation, stating that remaining free was essential for maintaining company operations, including the payment of employee wages. Chairman Kim was also quoted as saying that, as the founder of Asia’s largest private equity firm and a pioneer in Korea’s private equity industry, facing such allegations felt like having his entire life denied.
The hearing began at 10 a.m. and concluded around 11:40 p.m., lasting approximately 13 hours and 40 minutes—reportedly the longest pretrial detention hearing since the system was introduced. Prosecutors and defense attorneys submitted around 500 and 1,500 PowerPoint slides, respectively, engaging in an intense legal battle.
Despite the executives’ claims, Homeplus informed employees on Jan. 14 that, due to cash flow constraints, it would be difficult to pay January salaries as scheduled. The company added that wages would be paid once its financial situation improves. An MBK Partners official said that salaries were not being permanently suspended but delayed until liquidity conditions stabilize.
Chairman Kim and other executives are accused of issuing a large volume of asset-backed short-term bonds (ABSTBs) despite being aware of the likelihood of a downgrade in Homeplus’ credit rating, before subsequently applying for court-led rehabilitation—allegedly causing losses to investors. Prosecutors believe the executives were aware of the downgrade risk as early as February last year.
Korea Investors Service downgraded Homeplus’ credit rating from A3 to A3- on Feb. 28 last year. Four days later, on March 4, Homeplus filed for corporate rehabilitation with the Seoul Bankruptcy Court. Prosecutors argue that selling bonds while anticipating a credit downgrade and then promptly seeking rehabilitation constitutes deliberate fraudulent trading.
MBK Partners has denied all allegations, stating that Chairman Kim was not directly involved in Homeplus’ day-to-day management and that the rehabilitation filing was intended to save the company.
Prosecutors are expected to decide whether to reapply for arrest warrants or proceed with indictments without detention after reviewing the court’s reasoning.
Alphabiz Reporter Kim Jisun(stockmk2020@alphabiz.co.kr)
