Court Rules Sale of Korea Exchange Bank Legal

The Seoul Central District Court yesterday said there was nothing illegal involved in the 2003 sale of Korea Exchange Bank to Lone Star.

The court cleared Byeon Yang-ho, a former official of the Finance and Economy Ministry, on charges that he collaborated with Lone Star to sell the bank at a bargain price and harming both the bank and the country.

Also cleared of embezzlement charges was former Korea Exchange President Lee Kang-won and former vice president Lee Dal-yong.

Lee Kang-won, however, was sentenced to 18 months in prison and fined 157 million won (103,630 U.S. dollars) for receiving bribes from suppliers and creating slush funds.

The court said, "It is hard to deny that some inappropriate behavior occurred given that Byeon and Lone Star Korea CEO Steven Lee met during non-business hours while the Korea Exchange Bank deal was under negotiation. From a broader perspective, however, it is hard to see that he recognized that he went beyond his boundaries or had the intention to embezzle."

Prosecutors said they will appeal the ruling, saying, "From a larger perspective, embezzlement and bribery are like two sides of a coin. We cannot understand that the court saw no intent to embezzle and no intention was involved in the bribery."

bell@donga.com