Kim cites regulators in letter to investors even as probes continue
Korea’s FSS and prosecutors press ahead; labor and politicians push back
MBK Partners Chairman Michael Byung‑ju Kim told investors that authorities have repeatedly confirmed MBK committed no illegal acts related to troubled retailer Homeplus, even as prosecutors and regulators continue pursuing cases tied to the deal. In an annual letter sent to domestic and overseas limited partners in late March, Kim stressed the need to balance investment principles with social responsibility, according to local media. Politicians, labor groups, and some investors say he is downplaying the severity of the situation.
Regulatory and criminal proceedings continue. The Financial Supervisory Service (FSS) completed an inspection of MBK’s acquisition and management of Homeplus and is now preparing to present a proposed disciplinary action to its sanctions review committee. Late last year, the watchdog referred several MBK executives to prosecutors for suspected violations of the Capital Markets Act related to Homeplus financing and investor disclosures.
In January, the Seoul Central District Prosecutors’ Office requested arrest warrants for Kim and Vice Chairman Kim Kwang‑il on charges including fraud under the Act on the Aggravated Punishment of Specific Economic Crimes and violations of the Capital Markets Act. Prosecutors estimate about 116.4 billion won, or roughly 79 million dollars, in alleged fraud tied to Homeplus bond sales. They argue that MBK and the retailer knew of an impending credit rating downgrade and rehabilitation plans when the securities were issued. A Seoul court rejected the arrest warrants, but the investigation remains active, and prosecutors are still considering possible indictments.
Political and public pressure has intensified. During a parliamentary audit last October, lawmakers pressed regulators on private equity’s social responsibility, with some calling for strong sanctions against MBK if misconduct is confirmed. Labor groups and tenant merchants at Homeplus stores staged protests over a planned restructuring and the alleged harm it would cause to investors. Opposition politicians criticized the rehabilitation plan as shifting losses onto workers, suppliers, and smaller creditors.
Kim’s letter highlighted that distributions to limited partners reached about 1.7 billion dollars last year, up from the previous year. Critics in labor and political circles say the focus on payouts contrasts with the positions of Homeplus employees, franchisees, and bond investors, who are still dealing with fallout from the retailer’s restructuring and alleged securities mis-selling. MBK has denied all allegations in the Homeplus case, saying regulators and prosecutors misinterpreted efforts to stabilize the retailer and protect asset values. In response to questions from Korea Duty Free News (KDFN) about Kim’s investor letter and ongoing investigations, the firm declined to comment.
By Min Byung-kwun, KDFN
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