Following the Director
After Kim Seong-ho and Hwang Do-beom had left, Lee Tak-hyeon remained alone in the secret chamber, keeping watch over it.
Roughly two hours passed before Hwang Do-beom returned.
"You're back?"
"Yes. I've taken care of everything."
Hwang Do-beom answered, then glanced at the ashtray set before Lee Tak-hyeon. Cigarette butts were piled high inside it. Making a mental note that he would need to replace the air-circulation filter, Hwang Do-beom delivered his report.
"I clearly conveyed our position to the President's side. And I promised two hundred billion won in campaign support for the presidential election."
Lee Tak-hyeon's expression turned bitter at the report.
"Right. With the campaign funds we promised, the current President can continue to exert influence over the party, so he won't be able to say anything more. We've essentially saved face for him."
The other side had come with a request; not only had they refused it, they had spent money as well. And the two hundred billion was not the end of what they would have to spend.
"Don't forget to make the same promise to the opposition, just as Son-in-law Kim said."
"Yes, sir. Understood."
They had decided to support the opposition with the same amount—two hundred billion—rather than promising only the President's side. Lee Tak-hyeon's bitter look deepened.
"We were the ones who received the request, yet somehow we're the ones ending up spending the money. Four hundred billion, at that. Heh heh."
Lee Tak-hyeon thought for a moment, then shook his head.
"And when you factor in the three thousand billion already spent that we can't recover, the losses this time are catastrophic."
Hwang Do-beom spoke carefully.
"Would it have been better, given that we had already decided to acquire Dubo Steel, to simply look the other way and grant the President's request?"
Hwang Do-beom's words were not a suggestion to reverse course and grant the request. With everything already handled, changing the decision was impossible. He was merely checking once more that Lee Tak-hyeon's choice had been the better one.
Lee Tak-hyeon understood exactly what Hwang Do-beom meant.
"This is a President with less than a year left in his term. How far do you think we can cover for his dirty laundry? If we try to bury it for him and end up getting dragged in ourselves, we're finished. Looking to the future, cleanly writing off the three thousand billion is the best option."
"Then wouldn't simply refusing the request have been enough? Why go further?"
"Did you not hear what Son-in-law Kim said a little while ago?"
Lee Tak-hyeon clicked his tongue and repeated Kim Seong-ho's words almost verbatim.
"No matter how many teeth the President has lost, a president is still a president. If he harbors a grudge and swings his blade at us, even a toothless sword can take off an arm or a leg. If we're unlucky, it might take our heads..."
Lee Tak-hyeon clenched the cigarette pack in his hand until it crumpled. Then, steeling himself, he spoke.
"Don't cling to regrets. Even if this is a dog-shit situation where we're throwing away another four hundred billion just to lose the three thousand billion... what can we do? We should blame the original choice of going after Dubo Steel in the first place."
He flung the crushed pack toward the ashtray, rose from his seat, and said,
"Let's put an end to the Dubo Steel matter with this."
Having answered Hwang Do-beom's question and settled his own mind, Lee Tak-hyeon decided to leave no lingering attachment behind.
"But someone will have to take responsibility for a failed investment."
Standing at the door, he stopped and turned his head to look at Hwang Do-beom.
"Make Sang-jong—the one who first proposed the investment—take the blame for this."
"Yes, sir. Understood."
Lee Tak-hyeon walked out of the secret chamber into the brightly lit corridor.
Jo Chung-sep swallowed dryly and spoke to Kim Seong-ho.
"Director. Is Dubo Group... really going under?"
"'Going under' isn't quite right. 'Being cleaned up' would be more accurate."
Kim Seong-ho glanced around the office, now tidy after the cleanup, as he answered. For Jo Chung-sep, the idea that a group that had hovered around tenth in the business rankings could collapse in an instant was simply unbelievable. That was why he kept pressing Kim Seong-ho.
"So in any case, you're saying Dubo is going to vanish from the world...?"
"The name will vanish, yes. But the company itself won't disappear. The creditors will do everything they can to salvage even a single won—clean it up, polish it, and try to sell it off elsewhere."
Kim Seong-ho tapped the chair with his hand and asked,
"By the way, President Jo. Isn't this chair uncomfortable? You should buy yourself a better one."
"Director, that's hardly the important thing right now."
Jo Chung-sep brushed the question aside and asked something else.
"Is it true that Ilhyeon Group really isn't going to acquire Dubo Steel?"
He stepped closer and lowered his voice.
"Right now the market is full of rumors that Ilhyeon Group is going to take over Dubo. So..."
He glanced around once more, then spoke even more quietly.
"The market is starting to stir. At this rate the index might climb again."
The composite stock index had already dropped nearly ten percent because of the Dubo Group crisis. Kim Seong-ho's account—which had shorted futures before the Dubo scandal broke—and Future Asset, which had followed his position into the short, had both made a fortune off the Dubo Steel collapse.
"Director. With the index down ten percent, we've already realized over fifty percent profit. Should we close out around here? If Ilhyeon Group actually does acquire Dubo, everything we've made so far could evaporate."
Jo Chung-sep felt it was time to unwind the positions and asked Kim Seong-ho. But Kim Seong-ho said nothing. He slowly walked through the office, then stepped into the private room set aside for Jo Chung-sep on one side. With a stifled, anxious feeling, Jo Chung-sep quietly followed.
Once Kim Seong-ho confirmed that Jo Chung-sep had closed the door behind them, he spoke.
"President Jo. I'll say this one last time, so listen carefully."
"Yes, Director. Please go ahead."
Jo Chung-sep swallowed hard and focused every bit of his attention.
"No matter what stories circulate in the market, I have no intention of closing this position this year. When expiration approaches, roll it over and keep shifting the position into the next-month contract."
"Keep it open? What on earth is the target price—?"
Rolling over a futures position while paying the rollover costs was uncommon. When it happened at all, it was usually the longs—those holding long futures—who held for extended periods. That was why an upward position was called a "long" and a downward position a "short." Declines tended to be short and violent; holding a short position for a long stretch was far from normal. Yet Kim Seong-ho was saying he would hold the short for a long time—and at the beginning of the year, no less, for the entire year. To Jo Chung-sep the position felt strange.
Kim Seong-ho lightly patted Jo Chung-sep's shoulder and said,
"The target? When the composite stock index starts showing a two in the front... that's when I plan to close."
He smiled brightly at Jo Chung-sep.
Knock knock.
"President."
Jo Chung-sep, lost in other thoughts, snapped back to reality at the voice of the employee who had knocked and entered.
"Huh? Ah. What is it?"
The employee asked about the investment direction for a client who would be coming shortly.
"President, what should we do? Shall we recommend growth stocks like construction and securities, the way we decided in this morning's meeting?"
Jo Chung-sep fell silent for a moment, thinking. Then, as if reaching a decision, he bit his lip hard and shook his head.
"No. Change the recommendation list."
"In which direction?"
The employee opened the notebook he had brought and held his pen ready to write down the instructions.
"Steer them as much as possible toward safe assets."
"Safe assets..."
After writing the words in his notebook, the employee asked for specifics.
"By safe assets you mean... bonds, right? Which treasury maturity should we propose? If we're thinking about returns, longer-term issues like the ten-year or corporate bonds might be fine... Corporate bond yields have gotten very attractive because of the Dubo Steel mess. I think corporate bonds would be both safe and reasonably profitable—should we aim that way?"
Jo Chung-sep shook his head.
"No. Absolutely not. Bonds—especially corporate bonds—are out of the question."
He spoke as if buying corporate bonds would bring disaster, then muttered to himself.
"Gold, maybe...? No. If things really go that far, gold won't be safe either. Gold is only safe when things are moderately bad. When everything is collapsing, gold isn't a safe asset either."
The employee, pen still poised over the notebook, looked puzzled. Safe assets usually meant bonds and gold, yet Jo Chung-sep was talking about them as if they were dangerous. His expression asked what could possibly be safer than gold and bonds. Jo Chung-sep seemed to recall something and asked,
"Didn't they say the American bank, Central Bank, is opening a branch in Seoul?"
The employee nodded.
"Yes. They're opening offices in Myeong-dong and Gangnam."
Confirming that the rumor he had heard was accurate, Jo Chung-sep's face brightened. He asked a few more questions.
"They were also doing some special event... the signup promotion, I mean."
The employee recalled the Central Bank staff who had visited and nodded.
"Yes. They're offering an extra zero-point-two percent in interest. But why—?"
Then his expression turned to alarm.
"President. You're not seriously telling me to recommend bank deposits to the clients, are you?"
Jo Chung-sep nodded.
"That's right. Recommend Central Bank deposits."
"President!"
The employee looked as if he might cry. Clients who came to an investment advisory firm rather than a securities house were not ordinary people. They came to Future Asset for recommendations that could multiply their money several times—or tens of times—even if failure meant losing everything. For people like that, "safe assets" meant top-ten market-cap stocks such as Ilhyeon Group. Telling them to put money into bank deposits—not even corporate bonds—was shocking.
The employee stared at Jo Chung-sep as if asking whether he was serious. Jo Chung-sep answered in a firm voice.
"Not just today's clients—propose to every single client that they move their funds into Central Bank deposits. Liquidate all the discretionary accounts we manage as well. Futures accounts are the only exception."
"President. Then what are we... supposed to live on?"
The referral fees from bank deposits alone would never keep the firm running. Jo Chung-sep, clearly worried about the same thing, squeezed his eyes shut. He wondered whether it was right, so soon after founding the company, to make a decision that could drive every client away. But he steeled himself.
I have to follow the Director.
Kim Seong-ho was the man who had turned one hundred million into tens of billions. That same man had spoken with absolute certainty about holding the position until a two appeared at the front of the index. On the composite stock index, a leading two could mean only two things: two thousand, or two hundred.
He can't be saying he'll hold a short futures position all the way to two thousand. The Director is talking about two hundred on the composite stock index.
From the present level down to the two hundreds meant the index would be reduced to one-third. If that happened, neither bonds nor gold would survive. That was why he had spoken of bank deposits. And Central Bank deposits were special.
Foreign-currency deposits. Deposits held in dollars—the key currency that dwarfed the Korean won—at an American bank several times safer than any domestic one. That, he decided, was true safe-haven money.
Jaw clenched, Jo Chung-sep told the employee,
"Don't worry. Even if I have to sell the house I live in, I'll make sure your salaries are paid. Just follow my instructions. Central Bank foreign-currency deposits. That is the only recommendation Future Asset will make."
He gave the order and clenched his fist. He had already made the gamble of leaving Ilhyeon Securities because he trusted Kim Seong-ho. Now he was placing another gamble by following him again. The composite stock index had swayed because of Dubo Group's bankruptcy, but it was still sitting in the eight hundreds.