SEOUL - LG Group chairman
Koo Bon-moo and other large shareholders are likely to
be cleared of charges that they sold stakes in in LG
Card Co last year, using insider information, officials
said.
Creditors bailed out ailing LG Card, the
former credit card arm of the country's second largest
conglomerate, early this year to keep it above water,
officials said on Tuesday. LG Card is now controlled by
the creditors.
In January, the labor union of
troubled LG Investment & Securities Co, the group's
brokerage affiliate, filed a complaint against the
country's financial watchdog agency, alleging that Koo
and 93 major shareholders had engaged in insider trading
by dumping their LG Card stakes with advance knowledge
of its approaching liquidity crisis.
"After
internally reviewing the allegations, we have concluded
for the time being that it is difficult to regard it as
insider trading," an official of the Financial
Supervisory Service (FSS) said on condition of
anonymity. "We will deliver a final decision soon, after
a further investigation."
The shareholders's
sale was stretched over a long period, which indicates
that they sold their LG Card stakes as a means to spin
off an affiliate off the group, unaware of its liquidity
crisis, the watchdog group said.
In its
complaint, LG Investment's union said Koo and the other
large shareholders must have unloaded their holdings
because they were in a position to know about LG Card's
cash crunch.
"Anticipating LG Card's liquidity
crisis, Koo and other shareholders had steadily sold off
their stakes in the card firm since November 2002, and
intensively disposed of it from six months ago at the
time of the liquidity crisis outbreak," it argued.
LG Group denied the allegations, saying the sale
of LG Card shares by some of its major shareholders had
nothing to do with the card firm's crisis.
Those
shareholders acted with approval from the Fair Trade
Commission (FTC) which supported the group's decision to
spin off LG Cable, the group said.
The FTC is
the country's watchdog agency that monitors
conglomerates' unfair business practices and polices
trusts.
LG Investment's union lodged a separate
complaint with the Board of Audit and Inspection last
month, saying the FSS overlooked the alleged insider
trading.
(Asia Pulse/Yonhap)
Jul 7, 2004
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