Report says 2003 documents were written by regulators, not accounting firm
Financial regulators are suspected of fabricating documents on Lone Star Funds in 2003 when Korea Exchange Bank was acquired by the buyout fund, according to a news report.
At least over the past few months, the Financial Services Commission (then the Financial Supervisory Commission) has argued that the records, submitted by an accounting firm, prove that Lone Star was eligible to own a Korean bank.
But the documents were allegedly drawn up by financial authorities ― the FSC or the Financial Supervisory Service, an executive arm of the FSC ― not by the accounting firm Samjong KPMG, the TV news report said.
The report alleged that Samjong KPMG was pressured to write down a signature by regulatory officials.
“Regulators sent a draft at that time. Our firm offered only the signature after reviewing the draft for several hours,” ab anonymous Samjong spokesman was quoted as reporting by MBC-TV.
Another spokesman was quoted as saying that “(regulatory officials) said Samjong will not be held accountable and they called for us to meet the requirements set (by the draft).”
A spokesman for the FSC declined to comment on the TV news, saying that “it seems that no comment is the position (of the FSC’s bank division).”
The news provider said representatives for Lone Star as well as financial authorities refused to mention the allegations.
It also mentioned the recent speculation ― “same handwriting” for the signature on the 2003 one and the 2010 one.
Despite the same-style signature, the accountant in charge of the 2010 documents on Lone Star was not the person who took on the Lone Star review in 2003, according to industry observers.
Furthermore, while analysis by an accounting firm is usually drawn up at the end of a quarter such as March 31 and Sept. 30, the documents specified the date as Sept. 24, according to the news. The FSC approved Lone Star’s KEB acquisition on Sept. 26, 2003.
Concerning the allegations, the Citizens’ Coalition for Economic Justice said in a statement that it is time for the prosecution to launch an investigation into the FSC and FSS.
“Past allegations were focused on irregularities of Lone Star. As the allegations are being expanded to financial authorities, prosecutors’ probe is necessary,” the civic group said.
The FSC has argued that the U.S.-based fund was a “financial” investor, which is entitled to own KEB, in 2003.
A group of lawmakers and unionized workers of KEB say the regulatory endorsement in September 2003 and Lone Star’s KEB takeover in October 2003 were originally invalid.
