Improper Solicitation (2)
Bribery was punishable whether you were the one giving it or the one taking it.
From Hanjeong Group’s perspective, the money had already been handed over, but nothing had been received in return. Since they couldn’t exactly ask for it back, they would have gone to great lengths to keep everything confidential.
Then there’s a traitor around me?
President Oh Young-hwan was extremely cautious by nature and did not trust the people around him easily. That meant only a handful of close aides knew anything about it.
He went through the people who might have betrayed him, one by one, in his head.
Chairman Ju Min-jae said,
[In my opinion, it looks like someone has been manipulating the situation from behind the scenes.]
At those words, President Oh Young-hwan felt as if he’d been struck in the head with a hammer.
“What do you mean by that?”
[I can’t be certain, but that’s the impression I’m getting.]
“Are you talking about KSGI and Elliott?”
[I’m not sure.]
“Either way, this has already happened, so we need to clean it up. If we handle this wrong, we’re all finished.”
Finding the traitor could wait.
The two of them first discussed how to contain the situation.
* * *
The first outlet to report the story was News Trigger.
Even if the mainstream media were watching the administration’s mood, this was not the kind of scandal they could simply ignore.
In the end, newspapers and broadcasters alike, small internet outlets and major networks alike, domestic media and foreign press alike all began flooding the country with related reports from every direction.
I read the comments flooding onto the internet.
Sara could barely hide her shock.
“So the K-Culture Foundation really was the president’s slush fund?”
I shrugged.
“I told you so.”
To make an exposé stick, you needed evidence.
For someone like me, with almost nothing to my name, getting hold of the K-Culture Foundation’s records would have been impossible. But for a CFO at A-Oil, it was a different story.
Sara was able to obtain with ease the materials showing that the Federation of Korean Industries had collected money from corporations and handed it over to the K-Culture Foundation.
A-Oil had also donated 500 million won.
Foreign shareholders probably meant they contributed less, but the Korean chaebols had donated tens of billions each as a baseline.
There was no documentation yet for Hanjeong Group’s 10 billion won donation funneled through a paper company, but that would come out once the K-Culture Foundation itself was pried open.
Our People Party, the opposition, demanded a special counsel investigation, while the ruling New Korea Party shouted its opposition to the heavens and rushed to shield the president.
In that situation, if the National Pension Service sided with Hanjeong Group, what would happen?
That would be no different from admitting they had taken bribes. They wouldn’t dare oppose it outright, either, so in the end they would have no choice but to give up exercising their voting rights.
The truth was that, compared with the time before I regressed, not much about the article itself had changed. The difference was that it had broken at exactly the right moment.
Timing mattered in this world.
What had started with Ju Hyeon-jin’s remark had snowballed into the first-ever bribery scandal to hit the Blue House.
Come to think of it, this was how it should have been from the beginning.
The president took bribes and sided with a chaebol group, and somehow nobody was supposed to be held responsible? That made no sense.
* * *
When major shareholders form an alliance for profit, that’s nothing unusual. And the side with the larger stake usually ends up leading the alliance.
So under normal circumstances, Elliott should have led the coalition. But the person actually holding the reins was Representative Kim Sung-gwun.
There were two reasons for that.
First, he knew the Korean situation better; second, it would help escape the frame of “foreign speculative capital attacking a Korean conglomerate.”
Representative Kim Sung-gwun was a legendary figure in the Korean private equity world.
He had already pulled off multiple acquisitions and exits, delivering huge returns to investors, and he was known as the Midas hand of private equity.
Even for him, though, this was the first time he was taking on one of the top ten chaebol groups.
Unfortunately, the situation was far from friendly.
The court dismissed KSGI’s injunction, and Hanjeong Mulsan quickly completed the sale of its treasury shares. Politicians raised their voices, warning that a domestic conglomerate could not be allowed to fall into the hands of speculative capital.
Now all eyes turned to the National Pension Service.
Several institutions, including the global advisory firm Macaulay Consulting, issued reports stating that the merger ratio had been set unfairly and could harm the interests of Hanjeong Construction shareholders.
Representative Kim Sung-gwun used that as the basis for media interviews, arguing that “since the National Pension Service is run with the people’s retirement assets, it should not support the merger plan.”
But the media barely covered his words.
Instead, they ran with failures from abroad and at home, along with remarks from Professor Jung Hyun-ho of Korea University, who said that “shareholder capitalism focuses only on short-term results and carries a high risk of damaging a company’s long-term growth.”
They also wrote that if the joint coalition kept interfering with management, there would be massive restructuring, and when Hanjeong Construction’s labor union saw that, it issued a statement condemning speculative capital.
Once management was reshuffled and the organization reorganized, some people were bound to get cut. So it wasn’t entirely wrong.
Chairman Ju Min-jae, on the other hand, flatly declared that there would be no restructuring even after the merger, and won the union’s support.
After all, salaries were paid by the company, not by the chairman himself, so from the owner’s perspective there was nothing to lose.
The important thing was that shareholder interests had been completely ignored in the decision.
The owner of a corporation is the shareholders, and the man at the top is merely their agent. An agent is supposed to do his utmost for the benefit of the principal.
But for some reason, that simple logic didn’t apply in Korea.
Owners pocketed the profits that should have gone to shareholders, and even when they were arrested for embezzling hundreds of billions, the courts handed down suspended sentences on the grounds that chaebols contributed to the economy. Ordinary people didn’t even find that strange.
It was as if everyone had joined hands to protect the chaebols’ control of their companies.
That’s why Korea gets called a chaebol republic.
For now, he secured the foreign investors’ shares and began persuading the other institutions and companies that held stock as well.
He also borrowed against existing holdings to raise 300 billion won in capital. It was a signal that additional shares could be bought at any time.
But if the National Pension Service came down on the side of approval, his chances were slim.
No matter how he ran the numbers, the balance of the battle was steadily tilting toward Hanjeong Group. Unless something completely unexpected happened, defeat was certain.
And then that very unexpected thing happened.
Director Ju Hyeon-jin’s abuse of power, his contempt for minority shareholders, and the bribery allegations that followed...
As I was urgently checking on the situation, the phone rang.
[Interesting things are happening. Surely this wasn’t your doing?]
The caller was Rupert Hwang of Elliott Management. An American of Taiwanese descent, he was the head of the Asia region.
At the question, Kim Sung-gwun shook his head.
“No. I didn’t do anything.”
[Either way, this has tied the National Pension Service’s hands. I never imagined something like this would happen with the shareholders’ meeting so close.]
“Neither did I.”
The National Pension Service was the key to getting the merger approved. Even if it didn’t take an outright opposing stance, simply abstaining from the vote would be fatal for Hanjeong Group.
It was as if heaven itself had stepped in.
Rupert Hwang said, sounding stunned,
[This couldn’t have happened on its own... so who the hell did this?]
“Ah...”
[What is it?]
In Kim Sung-gwun’s mind, the face of a young man surfaced.
“I think I know who it is.”
[Who?]
He had met him only because he was curious.
He had gone to see the man who had brought down CEO Park Tae-il, simply to put a face to the name.
And there, that man had said with perfect certainty that “the National Pension Service will give up exercising its voting rights.”
He didn’t know exactly how it had happened, but there was clearly some connection to this situation. No, maybe he had even set the whole thing in motion himself.
What on earth would his goal be?
What possible advantage could there be in doing this?
Kim Sung-gwun recalled what the man had said next. He had predicted the merger would fall apart, then spoken about what would come afterward.
Didn’t he say this would be the chance?
What exactly was Han Miru aiming for?
Come to think of it...
Kim Sung-gwun muttered,
“Hanjeong Mulsan’s trading volume has dropped to an unusual extent recently.”
[What does that have to do with this?]
KSGI and Elliott had been monitoring Hanjeong Mulsan’s stock price and trading volume as well.
They had already noticed that trading volume was shrinking.
Kim Sung-gwun felt a jolt of shock, as if lightning had struck him.
No way...
“What if there just wasn’t that much stock on the market to begin with?”
Rupert Hwang asked back in confusion.
[What do you mean? Are you saying Hanjeong Group bought shares under borrowed names? Looking at their cash flow, that shouldn’t be possible.]
Kim Sung-gwun said calmly,
“No. Listen carefully to what I’m about to say.”
* * *
The bribery scandal shook South Korea day after day.
Both the Blue House and Hanjeong Group denied everything, but the backlash showed no sign of dying down.
The one bit of relief was that bribery was still only an assumption; no definitive link between Hanjeong Group and ATJ had been proven.
The problem is that the assumption is true.
Then how had that reporter found out?
If it had been a major media outlet, they might have been able to dig up who had tipped them off. But a small internet news site that didn’t care about advertisers’ feelings was impossible to control.
As it was, the family at the top already had a bad image because of embezzlement, breach of trust, assault, and verbal abuse, and the case was still in court on top of that.
Now bribery allegations had been added to the pile, and Hanjeong Group’s image plunged straight into the abyss. Civil groups were already moving to launch a boycott campaign.
Under those circumstances, pushing the merger any further was impossible.
Ju Cheol-jin asked Chairman Ju Min-jae,
“Would it be all right if they really go ahead with a special counsel investigation?”
If they actually launched one and traced the money flow, they might get caught. In that case, someone would probably have to go to prison.
“The president will handle the political side himself.”
The ruling New Korea Party had the majority, and the president’s authority was immense. There was no way a special counsel would pass. In the end, the truth would never come out, and it would die as nothing more than suspicion.
But...
Chairman Ju Min-jae let out something like a groan and said,
“Then there’s no way to push the merger any further.”
That did not merely mean returning to square one.
There would be serious blowback.
KSGI and Elliott were not going to back down quietly.
They would use the shares they held as weapons and keep demanding management participation and shareholder-friendly policies.
To soothe shareholder resistance, they would need to offer carrots such as divestiture of non-core assets, listing affiliates, treasury stock buybacks, and expanded dividends.
But those policies would, in the end, weaken control.
Chairman Ju Min-jae shook his head.
“I didn’t think it would turn out like this.”
It was the result of several causes working together. But the person who had provided the most decisive one was sitting right there in this room.
Ju Cheol-jin ground his teeth as he looked at his younger brother.
“You bastard...”
Ju Hyeon-jin was on his knees, head bowed low like a criminal.
“I’m sorry, hyung.”
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