Foreign investors feel unease in South Korea

US equity investment group, Warburg Pincus, has under scrutiny from South Korea’s financial watchdog – the Financial Supervisory Service – after suggestions of insider trading.

This follows the sale of substantial share interests in credit card company LG Card, in October 2003, by Warburg Pincus. Shortly afterwards, LG Card was pushed to bankruptcy by a bursting consumer spending bubble. The allegations hinge on Hwang Sung-jin, who headed Korean investment operations in Warburg Pincus, as well as holding a directorship on LG Card.

Sourth Korea is itself keenly aware of massive stock profits made by foreign investors, since they poured equity investments into South Korea after restructuring, following economic crisis over 1997-1998.

Most recently, investment firm Newbridge made about $1bn in capital gains from the $3.3 billion sale of Korea First Bank, adding to general discomfort in South Korea regarding the size and influence of foreign investments within the country.

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