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Last Updated: Tuesday, 17 October 2006, 09:31 GMT 10:31 UK
S Korea raids Citigroup over KEB
Korea Exchange Bank offices in Seoul
The country's top lender is looking to buy Lone Star's KEB stake
South Korean prosecutors have raided the offices of Citigroup in Seoul as part of a probe into the sale of a local bank to a US investment fund.

The investigation follows claims that KEB's financial ill-health had been exaggerated so as to speed up the sale of a 50.5% stake to Lone Star in 2003.

The buy cost Lone Star 1.4 trillion won (802m; $1.2bn). Now it is selling its 71% KEB stake for 6.95 trillion won.

Citigroup advised Lone Star on its KEB buy, and on its current sale.

Series of raids

Lone Star is looking to sell its KEB stake to Kookmin Bank, the country's top lender.

The US fund, a top buyout fund in South Korea, has denied any wrongdoing.

Prosecutors raided Lone Star's office in South Korea in March and searched KEB's headquarters in June and September.

Tax and audit agencies have also investigated Lone Star this year over possible foreign exchange, currency trading and tax irregularities surrounding the KEB purchase.

The investigation has been expanded recently, with the Financial Supervisory Service also now looking at alleged unfair share trading in a former KEB credit card unit.

South Korean authorities have recently stepped up their anti-corruption activities and have been going after business leaders at some of the country's largest companies.

S Korea raids KEB over sale worry
29 Jun 06 |  Business

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