Leave All Possibilities Open
Ilhyeon Group had decided to abandon three hundred billion won.
In carefully measured language, they announced that they would offer Dubo Group no support whatsoever and would abide by the creditors’ decision—an indirect way of saying they were writing off the three hundred billion they had poured into Dubo Steel.
People stared at Ilhyeon Group in open astonishment. Even thirty billion was something to cling to; cutting away a sum as vast as three hundred billion felt almost superhuman.
Then came the next measure, and tongues began to wag in earnest.
“Did you hear? Chairman Lee’s second son stepped down as president of Ilhyeon Construction?”
“Looks like he was the one who pushed the Dubo Steel investment. That’s why they announced the dismissal out of season—not even during the regular executive reshuffle.”
“Dismissal? You mean he wasn’t just transferred to another affiliate or something?”
“No. Straight dismissal. He’s out.”
“Heavens…”
Lee Sang-jong had sat in the president’s chair at Ilhyeon Construction for more than five years; most people had assumed the entire construction arm would eventually fall to him. The fact that he had not even been moved sideways but simply fired left everyone unable to hide their shock.
“So succession is locked in for the eldest now?”
“Pretty much… right?”
“He’s the firstborn, so he already has the strongest claim, and the seat he occupies is higher than any of his siblings… Doesn’t that mean Vice Chairman Lee Mun-jong is all but confirmed as the next chairman?”
“Does that mean Ilhyeon is about to start the formal succession process?”
“They’ll have to begin soon. With the second son already cleared out, they can’t leave the heir’s seat empty forever.”
Everyone nodding along shared the same thought: Lee Sang-jong’s removal from Ilhyeon Construction over the Dubo Steel debacle meant the succession race had officially begun.
Yet contrary to every expectation, Ilhyeon Group could not afford to concentrate on succession at all.
Lee Gyeong-eun came home late that evening and sank into a chair, exhaustion written across her face. Kim Seong-ho, who had been studying his leather diary, left it open on the table and went to her. He began kneading her shoulders, trying to work the fatigue out of her muscles.
“Long day at the office?”
She closed her eyes under his hands and answered quietly.
“Hotel performance has been weak lately. And we still have to plug the hole left by the money we handed over for the Dubo Steel investment…”
She opened her eyes and looked up at him while he continued to massage her shoulders.
“A little soft performance I could have handled. But when that investment money just vanished overnight, plugging the gap has been absolute chaos. On top of that, guests have been scarce…”
Listening to her grumble, Seong-ho sat down beside her, took her hand, and patted it gently while asking about the current state of Ilhyeon Hotel in a calm voice.
“Have the guests dropped off that much?”
A faintly embarrassed look crossed her face as she nodded.
“Revenue is down more than ten percent compared to when you handed the hotel over to me.”
“What’s the reason?”
“Overnight stays are down over twenty percent year-on-year. Food and beverage has been carrying us; without that, we’d be in real trouble.”
“Why do you think the overnight guests are disappearing?”
“The economy feels terrible. People have started closing their wallets. Places like hotels that thrive when wallets are open are the first to suffer.”
“The economy is bad, is it…”
Seong-ho repeated her words slowly. From the beginning of the year the nation had been unsettled by the Dubo Steel crisis and the scandal surrounding the president’s second son. Consumers had tightened their belts and were waiting to see what happened next. Naturally, businesses that lived and died by the thickness of those wallets—hotels foremost among them—were feeling the pain.
Still trying to hold on to hope, Gyeong-eun forced a smile.
“Once the Dubo Steel mess is resolved, things should pick up a little, right?”
“Hmm…”
Seong-ho folded his arms and fell silent for a moment. The silence made her uneasy.
“Or… not?”
Still with his arms crossed, he turned to her and asked,
“How is the hotel’s cash position right now?”
The sudden question made her stare at him. Seeing the seriousness on his face, she set her own thoughts aside and answered first.
“Not good. Like I said, the Dubo Steel investment emptied the storeroom. We need to refill it if we’re going to weather whatever comes next… Right now we’re sitting in a very unstable place.”
“And the loans? Have you paid most of them down?”
“Yes. Ever since you told me to, I’ve reduced them quite a bit.”
“Good. The situation is only going to get worse from here. If the hotel had still been carrying heavy debt, both Ilhyeon Hotel and you would have been dragged under.”
“Worse? What do you mean, worse?”
Alarm flickered across her face. Even the Dubo Group crisis alone had made the economy stagger; the idea that things could deteriorate further sent a chill through her.
Seong-ho uncrossed his arms and cast a sidelong glance at the open leather diary.
[19xx Month — Bumi Specialty Steel Bankruptcy]
The diary listed the name of a company that would go bankrupt only a short while later, followed by a string of others. Seong-ho let out a quiet sigh, turned back to her, and began to explain, in a calm, steady voice, exactly what was coming.
The Dubo Group crisis that had shaken the nation since the New Year finally subsided into a temporary lull. People tried to erase the turbulent start of the year and, even if belatedly, reclaim a sense of lively momentum. Just as spring’s energy seemed ready to lift spirits again, unexpected news broke.
Bumi Group, another steel-focused conglomerate, had gone under. Its main bank, Jaeyi Bank—already strained by the Dubo collapse—refused further emergency loans on the grounds that recovery prospects were unclear. Unable to settle roughly eight hundred million won in promissory notes, Bumi Specialty Steel was finally declared bankrupt. The company was said to have borrowed more than four hundred billion from Jaeyi Bank, of which some two hundred forty billion had been pure credit with no collateral at all. When Bumi collapsed, Jaeyi Bank lost the entire unsecured sum overnight, and the fragile recovery atmosphere vanished in an instant.
The composite stock index slipped below nine hundred; the exchange rate rocketed past nine hundred won. Watching the situation deteriorate further, Jo Chung-sep clicked his tongue and reported to Seong-ho.
“Director, after Bumi Specialty Steel, Dubo Construction has also gone bankrupt. Rumors are flying that every single Dubo Group affiliate is about to fail.”
“I imagine so.”
Seong-ho listened with a composed expression while sipping his tea. Jo Chung-sep could only stare.
That look… as if he already knew.
Even news that should have been shocking left Seong-ho unmoved, as though he had foreseen every detail. Wondering how the man could possibly know such things, Jo Chung-sep continued.
“With Dubo Construction’s bankruptcy, Jaeyi Bank is reportedly pushing for court receivership followed by a third-party acquisition. One of the Dubo affiliates, Soseong Timber, has already entered the sale process.”
The corner of Seong-ho’s mouth lifted.
“Any interested buyers yet?”
“None so far.”
“Jaeyi Bank must be burning up inside.”
“Yes. And because of that…”
Jo Chung-sep glanced around the empty office. Even though he knew no one else was present and no one was coming, caution had become instinct.
“American banking circles are starting to worry that a Korean bank might actually fail.”
“They’re talking about Jaeyi Bank going under?”
“Yes.”
He nodded firmly and dropped his voice even lower.
“Both Dubo and Bumi used Jaeyi as their main bank. Billions lent without collateral, and even the 1.5 trillion that is collateralized is said to be underwater. Credit ratings have plummeted so far that Jaeyi can’t even borrow at high rates anymore; instead, counterparties are trying to pull their money out.”
“So the first cracks are showing in interbank transactions.”
“Exactly. The financial sector always reacts first and hardest.”
A dark expression settled on Jo Chung-sep’s face as he went on.
“There’s even a rumor that the U.S. Federal Reserve might apply the same measures it used during the Mexican crisis to us.”
Rumors of a Korean bank failure, followed by talk of Mexico-style intervention. A faint smile touched Seong-ho’s lips—unseen by Jo Chung-sep, who continued in a heavy voice.
“Three or four years ago the Mexican peso lost more than sixty percent of its value in a matter of months. When the government couldn’t stop the free-fall and the economy rotted to the roots, the Fed funneled fifty billion dollars through the IMF to keep Mexico from collapsing completely.”
“And they want to do the same to us?”
“In the worst case.”
Jo Chung-sep shook his head, as if willing the possibility away.
“The Fed didn’t help Mexico out of charity. They helped so that foreign investors could get their money out. Once every last investor had fled, Mexico’s economy was left beyond salvage—irrecoverable.”
He remembered a Mexico that had once been several times wealthier than Korea. That same country now lay in ruins. The thought that Korea could follow the same path sent a chill down his spine.
“It’s only rumor stacked on rumor, so I don’t think it will actually happen… but the situation isn’t exactly rosy. Jaeyi Bank is one of the top-tier banks in this country. When a bank like that takes hit after hit and staggers, the shock can spread beyond other banks and rock the entire nation. That’s why the talk is coming out of America.”
He paused, shook his head again, then forced a smile.
“Still, this is only possibility. There’s no guarantee that Jaeyi Bank failing would turn us into Mexico, and the odds are low. Even the Fed is just keeping the option open rather than treating it as inevitable. Maybe I’m being too pessimistic.”
“You’re right. Jaeyi Bank alone wouldn’t be enough to trigger that.”
Seong-ho smiled at the man who was trying so hard to stay positive.
“Correct. It won’t happen that way. Becoming Mexico would be a disaster.”
“What I meant was not that it won’t happen at all, but that Jaeyi Bank failing by itself wouldn’t be enough. If two or three more banks go down with it, the scenario becomes entirely plausible.”
“What… what do you mean by that?”
Jo Chung-sep’s eyes widened; he clearly had not grasped the implication. Seong-ho only smiled.
“We can think about that later. How is my account looking?”
The question snapped Jo Chung-sep back to the present. He reported the numbers.
“With Dubo followed by Bumi, the composite index broke eight hundred. Your profits have already exceeded one hundred percent.”
“So the total has passed one hundred billion?”
“Yes. As of yesterday’s close it’s sitting at one hundred four billion.”
Jo Chung-sep answered and looked at Seong-ho with open admiration. He had never imagined profits of this magnitude in so short a time. Watching Seong-ho strip the market to the bone with naked short positions left him half-terrified. Yet even these figures seemed to leave Seong-ho unmoved. He simply nodded, rose from his seat, and left instructions to keep the positions open and roll them over, then prepared to leave the office.
“Ah—one more thing.”
At the doorway he turned and offered a single piece of advice.
“Mr. Jo, don’t move as if you’re certain we won’t become Mexico. I recommend you always leave every possibility open and prepare accordingly.”
“Leave every possibility open?”
Seong-ho smiled lightly at the wide-eyed man.
“Things people swore could never happen keep happening. If you dismiss them from the start because ‘that could never be,’ you’ll have no way to respond when they do.”
He gave Jo Chung-sep a broad, confident smile.
“You may not fully understand what I’m saying right now… but you’ve trusted me this far. I’m only asking you to trust me one more time. Well then…”
He never spelled out exactly what Jo Chung-sep was supposed to believe. Yet Jo Chung-sep understood. His own quick judgment was already sounding emergency alarms inside his head.