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| The headquarters of Kyobo Life Insurance in Gwanghwamun, Seoul. / Korea Times file |
By Lee Kyung-min
Deloitte Anjin officials denied charges, last week, that it had exercised discretion to help inflate the value of put options to be sold by Affinity Equity Partners, a Hong Kong-based private equity firm (PEF), saying prosecutors' claims lacked the logic to indict its accountants.
This is the latest development in the years-long dispute between Kyobo Life Insurance Chairman Shin Chang-jae and the company's financial investors represented by a consortium led by the Hong Kong-based PEF.
The dispute is over whether the consortium can exercise a put option at nearly double the price Shin was willing to pay. A put option is a contract giving the owner the right to sell _ or sell short _ a specified amount of an underlying security at a predetermined price within a specified time frame.
During the hearing held at the Seoul Central District Court, last week, an attorney representing the accountants said the prosecution failed to identify how the indicted officials violated related laws in appraising the value of the put options in question.
The prosecution believes that Anjin accountants received 120 million won ($108,400) from Affinity executives in return for overvaluing the insurer's equity capital.
"The initial complaint took issue with how the accountants skirted related laws to draw valuations favorable for their clients, but the indictment mainly concerns the mere fact that the accounting firm and its clients exchanged opinions," Anjin's lawyer said.
"The valuation report of the case was written by the defendants and experts in the field without editorializing. It is therefore unreasonable to assume that the defendants received undue financial gains when the money was fair compensation for providing a service following a legal contract."
A lawyer representing Affinity also denied charges that the two of the firm's executives colluded with the Anjin accountants. He instead claimed that the trial was initiated by Chairman Shin as a stalling tactic to delay the firm from exercising the put option contract. Kyobo filed a complaint against the defendants with the prosecution.
"The firm executives did not decide on the method of price evaluation, nor did they exchange opinions with Anjin officials in any way to influence the outcome of the evaluation report."
The next hearing is scheduled for 11 a.m. on June 2. Apart from this trial, arbitration is ongoing at the International Chamber of Commerce (ICC) to determine the valuation of the put option. The consortium argues it should be at least 409,000 won per share, which was rejected by Shin who views the mid-200,000 won range as more than enough.
