Episode 177
“Ugh…” President Kim Dae-jung held his head in his hands, troubled by the demands to punish Joongang Investment Group.
“Joongang Investment Group… or rather, Baek In-hwi. What is he thinking?”
“Mr. President,” his chief of staff said cautiously, “the Assembly members’ demands are reasonable. The public is outraged.”
Countless small investors, ruined by the IT bubble’s burst, were directing their anger at the government. President Kim knew that the best solution was to offer them a scapegoat, but it wasn’t that simple.
“No company can withstand a raid, even without specific charges. We could use that to…”
“Chief of Staff Kim, how long has it been since your appointment? Six months?”
“Yes, sir. Why do you ask?”
“Then you might not know. It’s not something I would normally mention. But since the issue has come up, I’ll tell you. Joongang Investment Corporation, the core of Joongang Investment Group, is our Achilles’ heel.”
“Sir?”
An ordinary investment firm, the government’s Achilles’ heel? The chief of staff was bewildered. “What do you mean…?”
“We had no choice back then…”
President Kim, elected after the IMF crisis, had inherited a devastated economy. Foreign currency reserves were depleted, and they were dependent on the IMF’s handouts. It was a desperate situation.
And during the transition period, the previous administration had proposed allowing Joongang Investment Corporation to operate in Korea.
The initial investment was $1 billion, less than the $15 billion promised by the IMF, but it was a much-needed source of funds that the government could use without the IMF’s interference. He had been ready to accept the offer, but the source of the funds was a problem.
It was suspected to be the slush fund of a triad, a shadowy organization with a global reach. They were using Korea to launder their money.
But he had no choice. He was desperate for any kind of funding, so he had turned a blind eye to the dubious origins of the money and accepted Baek In-hwi’s offer. The $1 billion had been a lifeline.
“Including subsequent investments, they’ve brought in about $4 billion so far. We made a deal with the devil.”
The chief of staff gulped. “So you’re saying…”
President Kim said with a grim expression, “If Joongang Investment Group is investigated, the source of their funds will be revealed, and our involvement will be exposed.”
“We can just claim ignorance. We thought it was a legitimate investment.”
President Kim shook his head. “Baek In-hwi is not that naive. And do you think we just sat idly by? We tried to trace the funds, but the trail went cold. He’s meticulous.”
The funds had been transferred in cash from overseas accounts, making them untraceable.
“And how can we be sure he doesn’t have evidence of our backroom deals?”
“…You’re saying he’ll retaliate if we pressure him?”
“He’s capable of it. He’s never been afraid of us. He’s always been one step ahead, manipulating us and making us look like fools.”
The chief of staff, outraged that the president of a sovereign nation was being threatened by a shadowy figure, said, “We can’t let him get away with this, even if it means a public apology! We have to expose him!”
“Expose him? And what’s our excuse? ‘We knew it was mafia money, but we were desperate, so we turned a blind eye’? Do you think the public will buy that? And do you think his company is clean? They’re probably riddled with tax evasion and other illegal activities. And Daehoo Group’s collapse, the IT bubble burst, the massive bankruptcies… All orchestrated by Joongang Investment Corporation, whose money laundering scheme we enabled through our negligence?”
President Kim bit his lip. “The political fallout would be devastating. Tell our party members to oppose the raid on Joongang Investment Group.”
“B-but…”
“That’s my decision. The raid is off.”
The chief of staff bowed his head reluctantly. “Yes, sir.”
“Please understand. We were desperate back then, and the current situation is complicated. And…” He said with a hardened expression, “There’s no point in contacting Baek In-hwi. He won’t cooperate. Bring CEO Kim Min-sik to the Blue House quietly. I need to talk to him.”
“Wow, I never thought I would meet the president in person. This is amazing.”
Kim Min-sik whistled as he walked through the Blue House gardens. “It’s good to be alive. Right, Mr. Chief of Staff?”
“…” The chief of staff seethed inwardly, seeing his nonchalant demeanor despite having caused a national crisis. He was trying his best to remain calm.
“I wonder if the food here is good.”
“…Please refrain from such frivolous remarks in front of the President.”
“Was I being frivolous?”
He ignored him. “And please address him as ‘Mr. President.'”
“Huh? I thought they stopped using honorifics for government officials. They still use them here?”
The chief of staff, slightly surprised by his sharp observation, said, “…It’s just a formality. Just do as I say.”
“You’re being very bossy. I’m scared. Anyway, why did you call me here? I’m just a law-abiding citizen.”
The chief of staff, barely containing his anger, said, “Don’t you know why?”
“No, why? We’re just an investment company.”
“The IT market crash. Does that ring a bell?”
He chuckled. “Ah, that. I’m surprised the president himself is involved. We just bought and sold some stocks. He must be a good person.”
The chief of staff, realizing that further conversation would only fuel his anger, said, “…Let’s go. The President is waiting.”
“Welcome, CEO Kim Min-sik.”
“It’s a pleasure to meet you.” The chief of staff nudged him, and he said, as if just remembering, “Ah, right, you said I should address him as ‘Mr. President.’ It’s a pleasure to meet you, Mr. President.”
The chief of staff’s face was red, and President Kim also looked displeased, so Kim Min-sik said with a smile, “I’m sorry, it’s my first time meeting the president in person. Haha.”
“…Have a seat.”
Kim Min-sik sat down and looked around the room. “This place is fancy.”
The chief of staff, his face about to explode, whispered, “I told you to refrain from frivolous remarks.”
“You did, but why should I listen to you? You don’t pay my salary. The government just takes my taxes. Why should I be respectful?”
The chief of staff clenched his fists. “Do you know where you are? How dare you speak to me like that…”
“So…” Kim Min-sik said coldly, interrupting him. “…don’t lecture me. Understand?”
“Y-you…”
As the situation escalated, President Kim said calmly, “Enough.” He looked at his chief of staff. “We invited him here, it’s not polite to be so formal. And CEO Kim,” he said to Kim Min-sik, “please refrain from such behavior. We’re here for a serious conversation. I expect you to be respectful. Am I wrong?”
“You’re right. Fine, I’ll be serious. So…” he said casually, “what do you want?”
“You know that the National Assembly is demanding a raid on Joongang Investment Group for stock manipulation, right?”
“Oh, that. Yes, I know. It’s ridiculous. We just bought and sold stocks with our own money. Why are they making a fuss about it?”
“It’s not that simple. Do you think any company can survive a raid?”
President Kim narrowed his eyes. “Those Assembly members are just trying to deflect the public’s anger onto you.”
“I see.”
“But I’m against it. I can protect you.”
Kim Min-sik’s eyes widened. “Really?”
“But I have a few conditions.” He held up a finger. “First, no more investments in Korea.” He held up a second finger. “Second, gradually withdraw your investments from Korea. A sudden outflow of capital would negatively impact the exchange rate, which is finally stabilizing. And I’ll waive the three-year repatriation restriction. And lastly,” he said with a serious expression, “donate half of your profits to charity to minimize the criticism. If you agree to these conditions, I’ll protect you from the raid.”
“No more investments, that’s fine. We don’t have any immediate investment plans anyway. And withdrawing from Korea? What about Hanho Savings Bank and Daehoo Securities? Are you asking us to liquidate them?”
“I can help you find buyers if necessary.”
“That’s very kind of you. But donating half of our profits… How much?”
“About half.”
It meant donating about 3 trillion won, half of the 6 trillion won profit they had made from the 3 trillion won investment.
It sounded like a reasonable offer, avoiding a raid and keeping the other 3 trillion won.
But Kim Min-sik shook his head. “That’s a problem.”
“What’s the problem?”
“Donating the profits.”
“Is half too much? How much can you donate?”
Kim Min-sik smiled. “I can’t donate anything.”
“What?!”
“It’s our money. Why would we donate it?”
President Kim’s face contorted in anger. “Do you think I’m joking? Do you want to be raided? I’m the president! I have absolute power! I can destroy your company with a snap of my fingers! Do you understand?”
Kim Min-sik suddenly chuckled. “Mr. President, do you think we’re afraid of a raid?”
“What?”
He stood up and started pacing around the room. “What would they even find? Tax evasion? We’ve done that, of course. Everyone tries to minimize their taxes.” He spoke casually, as if it was nothing, shocking both the President and the chief of staff. “Embezzlement? We’ve done that too. I gave my wife the company credit card for household expenses.”
“You can’t be serious…”
“Slush funds? Of course, we have them. We used insider trading. They’ll find all sorts of things if they look hard enough.”
“So just accept my offer and…”
“So what?” He smirked. “How much would the fine be? 1 billion won? 10 billion won? Korea is a great place to do business. They’re so lenient towards white-collar criminals. One of our executives can just take the fall. And we can afford the fine.”
President Kim shouted angrily, “I can pressure you in countless ways! Do you think you can continue operating after crossing the president?!”
“Mr. President, we have no debt. We’re cash-rich. There’s nothing you can do to pressure us. Joongang Investment Corporation? You might try to trigger a bank run at Hanho Savings Bank, but…” His eyes gleamed. “Our loss compensation agreement is still valid, isn’t it? Are you willing to cover Hanho Savings Bank’s losses?”
“…”
“And Daehoo Securities? They’re just managing their clients’ money. Their profits might decrease if the clients leave, but is it worth sacrificing 3 trillion won?” He was referring to the donation he had refused to make. He continued pacing around the room.
“So, what else can you do to attack us? We’re invulnerable. Now it’s our turn to attack.”
“Attack?”
“You said the exchange rate has stabilized. Should we destabilize it again?”
President Kim’s eyes wavered.
“It would be fun to watch the exchange rate fluctuate wildly as CEO Baek transfers his money in and out of Korea, wouldn’t it?” He shuddered, imagining the consequences. “The WTO and the IMF wouldn’t tolerate that!”
Kim Min-sik shrugged. “It was just an example. And our second attack, how about liquidating Daehoo Securities and Hanho Savings Bank?”
“What?!”
“It would be interesting to see all those employees lose their jobs. Of course, we would lose money liquidating profitable companies, but it’s a small price to pay for an effective attack. And our final attack, we had many conversations with government officials before entering the Korean market, didn’t we?”
President Kim gulped as Kim Min-sik mentioned his deepest fear.
“We’ve accumulated a substantial amount of information. Should we leak it to the media? With some embellishments? Or should we just leave it where the prosecutors can easily find it during the raid?”
Did they think Baek In-hwi and I were unaware of his concerns?
We had meticulously documented our interactions with government officials, anticipating a potential betrayal, and the time had come to use that information.
“Th-that…”
“Do you understand why I’m so confident, Mr. President? We hold all the cards. Now, let’s have a real conversation. I’ll ask you a question.”
He walked back to his seat. “We’re willing to leave Korea. Not because we’re being forced out, but because we’re choosing to leave. What can you offer us in return?” His smiling face looked demonic. “We’ll give you the credit for driving us out. And the price will be steep. Offer us a compelling reason to leave Korea!”