After a decade-long dispute over the private equity firm’s sale of the Korea Exchange Bank, a World Bank tribunal ordered South Korea to pay $216.5 million plus interest to Texas-based Lone Star Funds. South Korea intends to appeal the decision.
AP — SEOUL, South Korea After a decade-long dispute over the private equity firm’s sale of the Korea Exchange Bank, a World Bank tribunal ordered Texas-based Lone Star Funds to pay $216.5 million plus interest. South Korea says it intends to appeal the decision.
Han Dong-hoon, the justice minister for South Korea, stated on Wednesday that his country thinks the decision to be unacceptable because the manner the financial authorities handled the 2012 transaction was flawless. He said the ministry is considering pursuing an annulment of the order and other steps so that “not a cent of our nation’s blood-like public money is spilled.”
Han said after the Seoul administration had received the decision from the International Center for Settlement of Investment Disputes of the World Bank. According to Han’s ministry, which represents the government in court matters, the payment mandated by the judiciary only constituted 4.6% of the $4.68 billion Lone Star had requested.
Lone Star filed for arbitration in 2012, arguing that the South Korean financial watchdog had unduly delayed its examination of the sale of KEB, thereby pressuring the takeover company to sell the bank for less.
When South Korea was only beginning to recover from the shock of the 1997–1998 Asian financial crisis, Lone Star bought a majority interest in the KEB.
Lone Star had intended to sell its stakes to HSBC, but the British bank withdrew its $6 billion offer in 2008 as a result of delays in the South Korean government’s clearance of the deal. They highlighted legal considerations following the conviction of a former Lone Star executive for manipulating the stock price of a KEB credit-card division.
In the end, Lone Star sold its interest to the Hana Financial Group of South Korea for 3.9 trillion won ($2.9 billion) in 2012.
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