State auditors say Lone Star bank buy improper

0 Comments | AFP, March, 2007

SEOUL (AFP) — South Korean state auditors said Monday that US buyout fund Lone Star was not a qualified candidate when it acquired the then struggling Korea Exchange Bank in 2003.

The Board of Audit and Inspection (BAI) said the country's financial watchdog had endorsed the 2003 sale of KEB to a private fund which was not qualified to be its largest shareholder while the deal itself was based on distorted figures to make the bank cheaper.

The Financial Supervisory Commission has been asked to review its decision and take "proper measures," BAI official Kim Byung-Chul told reporters.

The BAI's recommendation, however, is non-binding, he said, shifting reponsibility to the commission for any decision.

"We concluded that Lone Star should not become...