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South Korean tax authorities searched Lone Star Funds' Seoul office this week without prior notice as part of an ongoing investigation into the U.S. equity fund's sale of shares in local companies, the fund said Thursday.

"The National Tax Service raided Lone Star's Korean offices on Wednesday, apparently in relation to Lone Star Funds' recent sales activities," Lone Star Funds Chairman John Grayken said in a e-mail statement. "While we are disappointed by yet another unannounced raid of our offices, we are committed to cooperating fully with their investigation.”

Investigators from the National Tax Service (NTS) searched Lone Star's Seoul office for 13 hours and left with 11 boxes of documents and copies of computer files, the company said.

Officials from the NTS have been carrying out probes into the fund's sale of majority stakes in two local firms -- Kukdong Engineering & Construction Co. and Starlease Co. -- and a 13.6

percent stake in Korea Exchange Bank (KEB) in June.

Lone Star Funds is believed to have made a combined 1.5

trillion won (US$1.6 million) in profits by selling shares in the three firms.

While tax officials are digging into the sale to impose taxes on the profits, Lone Star says that it is exempt from taxes since its Belgium-based Star Holdings conducted the sale. South Korea and Belgium have a double taxation avoidance agreement.

The raid comes a month after South Korea's tax tribunal rejected appeals by Lone Star to nullify $110.7 million in penalty taxes imposed on its profits from the sale of the Star Tower building in Seoul.

Lone Star Funds also confirmed on Tuesday that the fund is in talks with British banking giant HSBC Holdings Plc to sell its controlling stake in KEB. SEOUL, Aug. 23 (Yonhap News)