Korea Exchange Bank and its biggest shareholder Lone Star Funds lost an international suit filed by Olympus Capital, the formerly second-largest shareholder of KEB’s credit card affiliate.

The International Court of Arbitration of Singapore, in its recent verdict, ordered KEB, Lone Star and three other parties to pay Olympus Capital $37.3 million (43 billion won) with arrear of interest of 5 percent per annum.

The equity fund Olympus Capital had argued that KEB breached its contract with the then second-largest shareholder of KEB Credit Service in 1999.

Olympus Capital also said it suffered huge losses from KEB’s takeover of its credit card affiliate in 2004.

Earlier this year, a Seoul court ruled that Lone Star manipulated stocks of the bank’s KEB Credit Service in late 2003.

Concerning the international verdict, KEB spokespeople said the bank has yet to clarify its stance as to whether it would shortly compensate Olympus Capital.

As the ICA ruled that the compensation should include arrear of interest of 5 percent between Nov. 20, 2003 and this Dec. 13, the total surpasses 50 billion won.

Hana Financial Group, which has been striving to acquire KEB from Lone Star, reportedly reflected KEB’s possible losses from the international dispute when it had signed a preliminary contract with the U.S.-based fund.

Meanwhile, the main opposition Democratic Party said Wednesday that it would launch a special committee, aimed at uncovering allegations involving irregularities of Lone Star, the Financial Services Commission and the Financial Supervisory Service.

Opposition parties including the DP and the Liberty Forward Party have allegedly failed to garner consensus from the ruling Grand National Party on the motion to conduct parliamentary investigation into the Lone Star allegations.

But the DP’s special committee is poised to push for the parliamentary probe by persuading the GNP again.

On Dec. 13, the DP submitted a motion for parliamentary investigation into a variety of allegations to the National Assembly.

The allegations include regulators’ behind-the-scenes endorsement of Lone Star’s KEB takeover in 2003 and dubious preliminary deal between Hana Financial Group and Lone Star to trade KEB shares, according to the motion, signed by all of the 87 DP lawmakers.

“As irregular practices of Lone Star and financial regulators have newly been being uncovered, we cannot entrust the issue with regulators any more,” Rep. Ooh Che-chang said.

A group of lawmakers from the ruling Grand National Party have also criticized the FSC for having been negligent in probing the fund’s eligibility.

By Kim Yon-se (kys@heraldcorp.com)