Where did Five Percent of BBK Shares Go?

The prosecution investigating the BBK stock price manipulation scandal raised suspicions over the fact that e-Capital, which had invested three billion won in establishing BBK, resold 95 percent of BBK shares to Kim Gyeong-jun, but left the remaining five percent without clear reasons.

In September 1999, e-Capital helped BBK obtain permission as an investment advising company by investing three billion won and bought 95 percent of BBK shares. After that, in November of the same year, e-Capital resold 50 percent of the shares (worth 1.5 billion won) in accordance to an agreement made with Kim. Subsequently, the company transferred the remaining 45 percent to Kim in March the following year.

In a seeming coincidence, in February and March of 2000 when e-Capital recovered almost all the investment funds from BBK, investors scrambled to invest in BBK. Among them was Samsung Insurance Co. which poured 10 billion won into BBK. e-Capital was in a position to hit a jackpot as it held over half of the BBK shares at the time, but it withdrew from BBK.

The prosecution doesn’t exclude a possibility that the remaining five percent of the shares worth 150 million won could have entered Kim’s pocket or that of a third person.

Given there is no reason for e-Capital to leave five percent of the shares, it is speculated that that Kim purchased all the shares but made a side contract stating e-Capital still held five percent of them.

Hong Jong-guk, then president of e-Capital, once said, “Some employees said that five percent was not sold, but I don’t remember because it was not a big deal.” However, he later retracted his remarks in an interview with a press on Sunday, saying, “I resold the five percent in 2000.”

dnsp@donga.com