Seoul
24 June 2008
A South Korean court has overturned the conviction of an American investment firm executive for financial crimes related to the purchase of a South Korean bank. It is the latest twist in a case that has come to symbolize South Korea's occasionally challenging disposition towards outside investors. VOA Seoul Correspondent Kurt Achin reports.
Tuesday's ruling by a South Korean appeals court overturns a five-year prison sentence handed down, earlier this year, to Paul Yoo - a Korea-based executive for the U.S. private equity firm, Lone Star.
Yoo had been convicted of conspiring to spread false information about assets belonging to Korea Exchange Bank. Lone Star bought a controlling interest in the bank, five years ago.
Prosecutors argued Yoo and KEB executives collaborated to drive down share prices of the bank's separate credit card unit, to make it easier to merge the unit back into the bank.
Yoo and Lone Star have insisted they did nothing wrong. A South Korean judge said Tuesday there was not enough evidence to sustain the convictions. He also canceled nearly $50 million in fines split between Yoo and KEB.
The Lone Star case has come to symbolize challenges that come with investing in South Korea, which has at times been seen as hostile to foreign influence and capital. Kim Sang-jo, an international trade professor at Seoul's Hansung University, says the timing of the verdict could cause such hostility to escalate.
He says South Koreans are already distrustful of the United States, in connection to a controversy about American beef imports. He says, even though the ruling was made in a purely legal context, it could fuel anti-American hostility further.
Lone Star is trying to broker a six-billion-dollar-plus sale of Korea Exchange Bank to Europe's HSBC, but HSBC executives have warned they may pull out of the bid, if it is not completed by next month.
South Korean financial regulators are delaying approval of the Korean Exchange Bank sale, pending appeals of Tuesday's verdict. Professor Kim says that might be a mistake.
He says, even though a court has ruled Lone Star is not guilty, regulators are dragging their feet. He says that must come as a disappointment to foreign investor and that it may get harder for South Korean President Lee Myung-bak to attract the kind of international investment he is hoping for.