“Meok-twi” meaning “eat and run” in the soju table language is often used to describe foreign investors making hefty profits before closing their operations in Korea. The new coined word appears in newspaper headlines and Internet blogs these days pointing at the Lone Star Fund over its sale of the Korea Exchange Bank after a long court battle and tussle with financial regulators.

Lone Star, a Texas-based private equity fund, landed in Korea along with some other foreign buyout capitals during the 1997-98 Asian financial crisis. It drew public attention with its purchase in 2000 of the Star Tower, then the largest building in Korea, and the acquisition of the then government-controlled KEB in 2003 for 2.15 trillion won, by then the largest single financial deal.

Yet, its operations here were marred by complaints from civic groups and criminal charges of tax evasion and other business improprieties. Public concerns grew as the media reported huge profits it was to make here, which led to controversies over the drain of national wealth. Even after Lone Star decided to sell its controlling shares in the bank in 2006, it faced prosecution investigations as well as attacks from the tax authorities, the National Assembly and civic advocates.

A number of financial officials were accused of falsely lowering the KEB’s capital adequacy ratio to expedite its sale to Lone Star and the fund’s Korea operations chief was charged with manipulating the stocks of KEB’s credit card subsidiary. Criminal proceedings lasted for nearly five years, moving up and down the three tiers of the court, until the final conviction last month which carried three years’ imprisonment of former Lone Start Korea head Paul Yoo and a 25 billion won fine on the fund.

Protests continue by the KEB unionists and some civic groups against the Financial Service Commission’s decision last week to allow Lone Star to sell its shares without imposing any punitive terms. Attention is again drawn to Lone Star’s expected profit of over 4 trillion won from the currently negotiated sale to the Hana Financial Group.

As we review the whole affair, the Korean government, especially financial regulators, certainly made a mistake to have sold the KEB to a foreign buyout fund in such a sloppy manner in order to retrieve government investment. However, we believe that the FSC made an inevitable decision not to order a punitive measure such as public sale in the stock market, considering its negative impact on Korea’s reputation and credibility in the global financial circles as well as the weak legal defense against the anticipated court action by Lone Star.

Four trillion won is a big amount to be given to a foreign private fund but government economists and financiers here should regard it as a fee for a precious lesson that they learned through a difficult time in the nation’s steady process of economic growth.