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(LEAD) Appellate court clears officials in sale of KEB to Lone Star
SEOUL, Dec. 29 (Yonhap) -- A Seoul appellate court on Tuesday upheld a lower court's ruling that the 2003 sale of Korea Exchange Bank (KEB) to U.S. equity firm Lone Star Fund was not conducted at a below-market price, a verdict that cleared government and banking officials involved in the sale of breach of trust charges.
Lone Star paid US$1.2 billion in 2003 to take over KEB, then Korea's fifth-largest lender and plagued at the time by the aftermath of the 1997 Asian financial crisis.
Prosecutors have said that the price was up to 825.2 billion won (US$705 million) lower than its market value and accused a finance ministry director, Byeon Yang-ho, of conspiring with the bank's then chief Lee Kang-won and vice chief Lee Dal-yong to artificially understate the lender's value.
The Seoul High Court upheld a Seoul district court's ruling which dismissed the breach of trust charges against Byeon and the two former KEB executives.
"If a government official made what he believed to be an appropriate policy decision to rescue an ailing financial institution and enforced it after obtaining internal approval, it is a matter of policy selection and judgment, not a question of breach of trust," the court said in its verdict.
"The bank's issuance of new stocks and disposal of old stocks were decided by its board and there has been no evidence of the former executives fabricating the financial report to gain Lone Star's confidence. Therefore, it is difficult to conclude that the bank was sold at a discount."
The lower court said at the time of its ruling that while there were "some inappropriate acts in the sale process, strictly speaking we found no evidence of any acts or intention to commit breach of trust."
brk@yna.co.kr
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