MBK Partners hit with tax probe as Homeplus debacle draws parliamentary scrutiny

MBK Partners faces government scrutiny and an ongoing tax probe amid mounting controversy over the investment firm's management of supermarket chain Homeplus.

The National Tax Service (NTS) launched a tax audit of MBK Partners on Tuesday. MBK Partners says it is a regular audit that is conducted every five years. This investigation, however, was instigated by a department of the Seoul Regional Tax Office in charge of non-regular inspections, according to the Chosun Ilbo, and mainly probes big firms and high-income earners. Irregular investigations by the NTS are normally conducted on suspicions of tax evasion.

MBK Chairman Kim Byung-ju, as well as Homeplus's co-CEOs Joh Ju-yeon and MBK Partners Vice Chairman Kim Kwang-il, have also been summoned by the National Assembly's National Policy Committee to testify on the supermarket chain's ongoing liquidity issues in a hearing on March 18.

Homeplus, acquired by MBK Partners in 2015, entered corporate rehabilitation on March 4, citing potential short-term liquidity issues stemming from a credit ratings downgrade.

The private equity firm has been facing growing criticism over its management, including its decision to usher Homeplus into corporate rehabilitation without attempting company-led efforts as well as allegations from the supermarket chain's labor union that its only focus is on recouping investments, which they say is proven by the reckless selloff of Homeplus's real estate assets. Entering corporate rehabilitation poses risks for individual investors who purchased the chain's commercial papers.

Along with mounted scrutiny over MBK Partners' past and current investment portfolio, the auditing results could also affect the firm's bid, coordinated with Young Poong, to take over the world's largest lead and zinc smelter, Korea Zinc, as well as its acquisition of CJ CheilJedang's bio business.

BY KIM JU-YEON [kim.juyeon2@joongang.co.kr]