Lone Star Funds' founder John Grayken, at a press conference in Seoul last month to defend his Dallas-based companies in South Korea

Deal or No Deal

We've noted a few times in the past how downtown Dallas-based Lone Star Funds wound up in trouble with the South Korean government, which raided Lone Star's offices in March and is still trying to track down Lone Star's main man in South Korea, Steven Lee. South Korean government officials insist that from 1998 to 2005, Lee embezzled millions and violated South Korean tax laws, but they can't find the guy; most likely he's in the U.S.

Well, it says here that Lone Star Funds' founder John Grayken--who BusinessWeek referred to last year as "a protege of Texas billionaire Robert Bass"--showed up in Manhattan on Tuesday to defend Lone Star's doing in South Korea. In short, it has to do with Lone Star's purchase of the Korean Exchange Bank and its pending sale of that financial establishment to Kookmin Bank. According to The Deal:

"Kookmin is buying a total of 64.2% from Lone Star and other investors for $6.65 billion. Lone Star paid $1.2 billion for its stake in 2003. The sale has been dogged by charges that Lone Star bought KEB shares at a price 'below market' in 2003 and had evaded South Korean tax laws.

'That is certainly not the case,' said Grayken at a press conference in New York Tuesday morning. Grayken said that South Korean prosecutors hope to close their investigation 'some time this summer.'"

As for the whereabouts of Steven Lee, Grayken swears he has no idea where the guy is hiding. Turns out Lone Star's even filed a lawsuit against the guy--which some South Koreans dismiss, along with Lone Star's promise to donate $106 million to that country's social programs, claiming Lone Star's just trying to cover it's tuchus while it quadruples its investment and skates out the country. --Robert Wilonsky

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