Two US executives of investment fund Lone Star may face extradition to South Korea after a Seoul court yesterday issued an arrest warrant on charges of manipulating share prices.
Prosecutors confirmed they would seek to extradite the executives of the Dallas-based fund, which has been beset by legal problems since it bought the ailing Korea Exchange Bank (KEB) in 2003.
The charges are punishable by up to 10 years in jail.
The court said Lone Star vice chairman Ellis Short and general counsel Michael Thomson had failed to cooperate in the prosecutors' probe. The pair said that even before warrants were issued, they were threatened with arrest if they came to Seoul.
"We have offered repeatedly to come to Korea for questioning, as long as we are allowed to leave. We remain willing to cooperate fully with the prosecutors' investigation if they abide by international standards of justice," Short said in a statement.
The US fund has denied any wrongdoing and has said it is the victim of a politically motivated investigation driven by hostility to foreign investors, who are closely watching the case.
Its attempt to sell KEB for a likely multi-billion dollar profit has been delayed by the prosecution investigations.
The Seoul Central District Court issued the warrants after rejecting two previous requests by prosecutors to arrest Short, Thomson and Yoo Hoe-won, the head of Lone Star Advisers Korea.
It again refused yesterday to issue an arrest warrant for Yoo, who is in Korea, Yonhap news agency reported.
"The extradition request will be made through diplomatic and judicial authorities of both countries," said Kang Chan-woo, spokesman for the prosecutor general's office.
The procedure may take several months or a few years, he said.
After Lone Star took over KEB, Short, Thomson and Yoo are suspected of manipulating the share price of KEB's credit card unit so it could be absorbed into the main bank more cheaply.
Seoul prosecutors claim smaller shareholders of the card unit suffered losses totaling 22.6 billion won (US$24 million).
Short said he and Thomson were "disappointed" with the decision to issue arrest warrants. He said the decision stemmed from their failure to comply with a prosecution summons to appear for questioning.
"As we have said before, we did not comply with that summons solely because of the prosecutors' threat to put us in jail if we came to Korea for questioning, a condition that is simply not acceptable," Short said.
Senior judge Min Byung-hoon said there were "considerable reasons to suspect that the accused might have committed crimes as depicted in the request for arrest warrants," adding that the investigation had advanced enough to press charges.
"In this regard, these are crimes that require the extradition of the accused," the judge said, also citing prosecutors' claims that the two US executives had six times rejected summonses to appear for questioning.
Lone Star bought a 51 percent stake in KEB for 1.38 trillion won in 2003. It recently signed a deal with top lender Kookmin Bank to sell its current 64.62 percent stake.