KOREAN GOVERNMENT AT IT AGAIN (SIGH)... PRIVATE EQUITY WITCH HUNT CONTINUES II

More news from Thomson's Jeff Borrell. This is really messed up:

In a further escalation of its pursuit of foreign private equity firms, Korea 's National Tax Authority has announced it is seeking personal prosecution of the recently resigned head of Lone Star Fund in Korea, Steven Lee, on charges of tax evasion, saying that Lee had evaded personal income tax payments in the country. The NTS says that at least four other Lone Star staff members are also headed for prosecution and will be restricted from overseas travel. The Korean Herald reported earlier that Newbridge officials are under investigation for tax evasion. It is the first time that the Korean government has sought to prosecute individuals, as well as their corporations. Market pros speculate that the new actions, taken on years-old PE investments and exits, could mean that the personnel of all foreign firms that have made spectacular exits in recent years will be liable to similar investigations and prosecutions, including: AIG, The Carlyle Group, Goldman Sachs, H&Q Asia, HSBC, Newbridge Capital, and West Brook.
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A day after Goldman Sachs was named as one of five U.S. firms being fined and referred to prosecution by the Korean National Tax Service (NTS), the private equity arm of Goldman is reported to be investing $550 million to acquire a 9.4% stake in Korea's Hana Bank. Hana, which is currently consolidating its banking and other financial operations, was mentioned in last week's APEN in a story about Hana being named as a possible acquirer of LoneStar Funds Korean Exchange Bank (KEB), a report Hana later denied. Lonestar is also being prosecuted for its earlier investment, sale and non-payment of taxes on an office property to Singapore 's GIC.

In a related story, another of the Singapore government's investment arms, Temasek, already holds a stake in Hana Bank. Goldman's purchase comes two years after it reportedly made $1 billion in tax-free profit from its sale of another Korean bank acquisition, Kookmin Bank. That investment and sale of a 5% stake in Kookmin is the reason Goldman is currently being prosecuted for tax evasion in Korea. Goldman is reportedly seeking the position in Hana Bank to gain access to the bank's funds management operations.