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Lone Star chairman John Grayken arrives in Korea by private jet at 11:30 p.m. Wednesday.
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Speculation is rife about why Lone Star chairman John Grayken (52) suddenly agreed to come to Seoul on Wednesday night. The moment he landed, he was banned from leaving the country for 10 days as prosecutors summon him for questioning. Nobody can rule out that he may not be able to return to the U.S. depending on the results of the investigation into alleged irregularities in his firm’s takeover of Korean businesses. Why did he risk it?
◆ The immediate purpose
Grayken is to testify at the Seoul Central District Court at 10:00 a.m. on Friday for the defense of Yoo Hoe-won, the former president of Lone Star's Korean subsidiary, who is accused of stock manipulation in connection with a controversial deal involving Korea Exchange Bank's credit card unit. Soon afterwards, Grayken will go directly to the prosecutors' office for questioning. A prosecutor said, "I don't understand why he abruptly volunteered to testify, given that his testimony is not essential in the investigation."
An official with the Seoul Central District Court also said, "We've accepted his request to testify although his testimony is not crucial to the proceedings." When Lone Star took over Korea Exchange Bank in 2003, Grayken did not even attend the signing ceremony in Seoul. That is why there is speculation that he is now here for some other purpose.
◆ Does Grayken want to meet Eldon?
One plausible scenario is that Grayken has an urgent reason to meet somebody here. Some speculate he wants to meet the British financial expert David Eldon, a top competitiveness policy adviser to president-elect Lee Myung-bak, to get help with his plan to sell Korea Exchange Bank. In that scenario Lone Star, which has agreed to sell the bank to HSBC by April 30, needs Eldon's influence.
Eldon, a British citizen, worked for HSBC for 37 years. Though an American, Grayken lives in London and Ireland. A bank official said, "I understand that Eldon is personally acquainted with Grayken."
◆ Does Lone Star need to sell KEB fast?
Since Lone Star’s products are private equity funds with maturity dates, Lone Star needs to sell Korea Exchange Bank fast to prevent a liquidity crisis, some experts say. If Yoo is convicted, he will lose his qualification as the bank's largest shareholder and the sale of bank may be canceled. In that event, it is likely the U.S. government will comply with the Korean government's request to extradite three Lone Star executives -- Steven Lee, the former head of the fund’s Korea operations, Ellis Short, vice chairman of Lone Star, and the firm's general counsel Michael Thompson -- for whom arrest warrants are out. Grayken might have felt the need to fly to Korea well in advance to turn the court proceedings to his advantage.
It would be a harsh blow to Lone Star if the three executives were to stand trial in Korea, and it could be impossible for the firm to sell Korea Exchange Bank. In the belief that the Lee Myung-bak administration is more business-friendly than the Roh Moo-hyun government, Grayken, observers speculate, is trying to make a good impression on the new Korean government.
(englishnews@chosun.com )
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