There had been rumors that other forces had intervened in the dissolution of the Jungwoo Group last time.
This was inevitable because the subsidiaries of the Jungwoo Group, which had been torn apart and sold to other large corporations and foreign capital, continued to grow without any issues.
"Exactly why was Chairman Park arrested by the prosecution? Tell the Chief Prosecutor to come in immediately."
"Yes, Mr. President."
Since the morning, President Kim Hak-gwon had been busy dealing with various reports of corruption and malfeasance in the Jungwoo Group that had flooded the major daily newspapers, and the news that the chairman of a large corporation had not been summoned to the prosecution but was instead urgently arrested.
A moment later, Prosecutor General Yun Chang-ho entered the Blue House at President Kim Hak-gwon's call.
"Welcome, Prosecutor Yun."
"Did you call for me, Mr. President?"
"Sit down first."
As soon as Prosecutor Yun sat down, Kim Hak-gwon sighed deeply.
"Exactly what is going on with the Jungwoo Group?"
In response to the straightforward question, Yun Chang-ho immediately gave the answer he had been thinking about on his way.
"The accounting fraud is really serious, Mr. President. If left unchecked, it could become a time bomb that could devastate the Republic of Korea."
"No, my friend. If something like that happens, you should report it to me first as the President."
"I apologize. We were preparing, but the media broke the story first, leaving us no choice."
At this, Kim Hak-gwon sighed again.
Yun Chang-ho drove the point home.
"Chairman Park Dae-ho could have fled the country at any time, so we had to arrest him urgently. The court issued a warrant immediately after reviewing the materials we prepared."
President Kim Hak-gwon frowned and remained silent for a while.
Finally, a heavy question came from his lips.
"Do you plan to detain Chairman Park?"
"Yes, Mr. President. If we release him without detention, there is a significant risk that he will tamper with evidence or cut his losses."
"Park has a lot to do, starting with the gold collection campaign. Can't it be avoided?"
"Mr. President, if you give the order, we will follow it. However, there will be considerable political pressure."
"Honeymoon period, isn't it? The media won't publish negative articles about me right away. So... release Chairman Park without detention for now. I'm not saying to drop the charges. Just investigate a bit more slowly without detention."
"Yes, Mr. President."
At that moment, the chief secretary rushed in from outside.
"Mr. President! You should see the news!"
"What? What's going on?"
Kim Hak-gwon, who was about to yell at the sudden opening of the door, closed his mouth when he saw the chief secretary's pale face.
The chief secretary turned on the TV without a word.
ā We are preparing for a hostile takeover of the key subsidiaries of the Jungwoo Group. As a major shareholder, I can no longer stand by and watch Chairman Park Dae-ho's misconduct, so I have made this decision.
ā What are your plans going forward?
ā We will initiate a public tender offer for the shares of Jungwoo Corporation and other core subsidiaries. I plan to act in concert with many investment firms that hold shares of Jungwoo.
On the screen, a woman with exotic features was being questioned by numerous reporters.
The subtitle 'Eva Zhu' appeared at the bottom of the screen.
"What is this?"
President Kim Hak-gwon, who had watched the press conference, opened his mouth wide in surprise.
Yun Chang-ho was focused on the voices of the announcers coming from the TV.
The chief secretary answered, his voice trembling.
"The press conference is just the beginning. We've received calls from American investment banks to the Ministry of Finance, asking for the government's stance on the Jungwoo Group."
"What?"
"If the government does not act according to the agreed plan... "
The chief secretary couldn't bring himself to say it, but President Kim Hak-gwon understood the unspoken words.
"Have the Minister of Finance come in immediately."
"Yes, Mr. President."
As the chief secretary hurried out, President Kim Hak-gwon turned to Yun Chang-ho.
"For now, let's think slowly about how to handle Chairman Park. You decide what to do."
Yun Chang-ho nodded with a calm expression.
"Then I will take my leave, Mr. President."
"Keep me updated on the investigation."
"Understood."
Yun Chang-ho stood up, bowed to the President, and turned to leave.
At that moment, President Kim Hak-gwon's voice stopped him.
"By the way, how serious is the accounting fraud?"
Yun Chang-ho turned around. His stiff mouth opened.
"From what we've uncovered so far, it exceeds 10 trillion won. This is just the tip of the iceberg."
"Indeed..."
President Kim Hak-gwon was momentarily speechless at the enormous amount.
"Moreover, there are signs that funds have been moved abroad. Embezzlement and breach of trust are the basics."
"......I see. You may go."
"Yes, Mr. President."
After Yun Chang-ho left, President Kim Hak-gwon, left alone, covered his head with both hands.
"What is Chairman Park thinking?"
As he shook his head in frustration, Finance Minister Lee Sung-gyu entered the room.
"Mr. President, you called for me?"
"Minister Lee, welcome. Sit down first."
Lee Sung-gyu, who had worked as a bureaucrat during the Fifth Republic, still used the term 'Mr. President' despite Kim Hak-gwon's request to avoid it.
"How is the situation?"
"The Ministry of Finance opposes injecting public funds into the Jungwoo Group. If we try to save the Jungwoo Group, the Korean economy might collapse."
"Indeed..."
"IMF will not stand idly by. The promised dollars have not yet fully entered the country."
"It's a top-three large corporation. We don't know what side effects there might be if it collapses."
President Kim Hak-gwon spoke heavily. Lee Sung-gyu's expression was also grim.
"What does the prosecution say?"
"They plan to conduct a detention investigation."
"IMF has provided a second round of support, which has temporarily put out the urgent fire, but there are no new investments from foreign investors. If Mr. President steps in to save the Jungwoo Group, which has management risks, no investor will want to invest in Korea."
President Kim Hak-gwon felt frustrated.
"Who is this Eva who held the press conference today?"
"She is an investor based in Hong Kong. She entered the country under the name Future Investment before the IMF negotiations were finalized. It is believed that she has backing from Hong Kong and British capital. Currently, she is focusing on real estate investments, but she may eventually start hunting for companies."
"What about her capital?"
"She is among the top foreign investors in the country."
Muttering the name 'Future Investment' to himself, President Kim Hak-gwon groaned.
"What do you think will happen with the hostile M&A?"
"It will be difficult. Even if she acquires all the shares on the market, it will be hard to win given the intertwined shareholdings among the Jungwoo Group subsidiaries. However, if time passes, it's hard to say."
The cross-shareholding structure of Korean large corporations was quite solid.
However, it was also a governance structure with many vulnerabilities from the perspective of foreign investors.
"10 trillion won in accounting fraud has been uncovered at the Jungwoo Group. Is this normal?"
Lee Sung-gyu's face turned slightly pale.
"Accounting fraud in large corporations is not a new issue. There was the case of Hyunbo Group, for example. But 10 trillion won... I've never seen such an amount before."
"What about breaking up the Jungwoo Group and having other large corporations acquire it?"
"It's too big. Besides the acquisition cost, the burden of debt and bad loans is too great for large corporations to step in easily. They might be interested in a few good subsidiaries, but they won't touch the bad ones."
As Lee Sung-gyu shook his head, President Kim Hak-gwon covered his forehead with his hand and muttered.
"Are you saying there's no solution?"
"Mr. President, you know that we need a white knight investor. Someone who is friendly to Korea, even though they are foreign capital, and who has good relations with the U.S. government."
"Are you talking about Han?"
"Yes, in an emergency, we can ask for his help. If the Korean economy stabilizes, we can then consider re-selling to domestic large corporations. Other private equity funds will strip the company of all its valuable assets as soon as they acquire it. Their goal is the company's capital, not the company itself."
The conversation between President Kim Hak-gwon and Finance Minister Lee Sung-gyu continued for a long time afterward.
A short while later, after concluding his meeting with the President, Finance Minister Lee Sung-gyu got into his official car and made a phone call.
"Yes, senior. It seems the government will not save the Jungwoo Group. You can proceed as planned."
ā Thank you. I'll set up a meeting soon.
"Thank you for your consideration. I'll see you next time."
The face of the Finance Minister, who had hung up the phone, showed satisfaction.
Although he was responsible for the Korean economy, Lee Sung-gyu was also a core member of the Mopha.
The official car carrying Lee Sung-gyu slowly entered the tunnel.
The future of the Jungwoo Group was also flowing into a long, dark tunnel with no end in sight.
* * *
In the end, a detention warrant was issued for Chairman Park Dae-ho, and he was immediately sent to a detention center that evening.
For several days, the front pages of major daily newspapers were dominated by stories about the Jungwoo Group.
"Still no call from the Blue House?"
"Yeah, not yet."
"It will come soon. Eva is doing her job well."
Eva continued to give interviews to the media, expressing her opinions.
As the Jungwoo Group wobbled and Eva's intention to make a public tender offer brought a long-awaited warm breeze to the stock market, which had been in a dark period, domestic large corporations were also eyeing the Jungwoo subsidiaries to see if there was anything worth acquiring. Overseas giant private equity funds also showed interest in joining the acquisition battle, deepening the government's dilemma.
"The accounting fraud that has been revealed is just the tip of the iceberg. Once the Financial Supervisory Service conducts a proper investigation, those who jumped into the acquisition battle will likely withdraw, waving their hands. Except for a few good subsidiaries, of course."
The accounting fraud at the Jungwoo Group was so sophisticated that it could be called a textbook case. Various ingenious methods, beyond imagination, were employed, which even experts found hard to understand.
It must have been a collaborative work of dozens of accounting experts and certified public accountants.
It would take a long time for the Financial Supervisory Service to uncover everything.
While all attention in Korea was focused on the Jungwoo Group's insolvency, other domestic companies continued to go bankrupt.
The government needed to make a quick decision on how to handle the Jungwoo Group.
"If the Blue House calls, will you meet alone? What about you, Mu-hyeok?"
"This time, you need to act alone, Hyung."
He patted Han Kyung-hyeong's shoulder.
Even if the presidential candidate Kim Hak-gwon looks favorably upon me, he won't be pleased if I get involved.
"Try to get as much debt forgiveness as possible. In return, promise to acquire everything as long as it's not beyond recovery."
"Okay."
Swallowing the Jungwoo Group whole is not something that can be done in a short time.
With two experts, Eva and Han Kyung-hyeong, involved, the government would have no choice but to side with Han Kyung-hyeong even if I don't get involved.
Leaving the public matters to them, it was now time to handle the private ones.
"Wait and see. It's going to get more interesting."
After the interest rate cap law was abolished, many loan companies from Japan began to enter the Korean market.
Even small loan companies unrelated to the Cheongpung Association started entering Korea, seeing it as a new and tempting market.
The legal maximum interest rate in Japan was 29.5%. With stricter government supervision, it was a good market even if they only maintained high interest rates as required by the IMF. With the abolition of the interest rate cap law, there was no reason for Japanese loan companies not to enter.
In particular, A&S Financial, established with the backing of the Yamaguchi-gumi, which is connected to the Cheongpung Association, began aggressive marketing with a Korean CEO.
A&S Financial, while a domestic entity, was essentially a Japanese loan company, with J&K Capital, a Japanese firm, holding 99.97% of its shares.
Due to the tight operations of domestic financial institutions, ordinary citizens had no choice but to borrow from loan sharks. The suffering from the absurdly high interest rates was also growing.
"We will enter into interest rate competition with A&S Financial. Lend at an interest rate 1% lower than theirs. Especially, actively promote refinancing loans for those who borrowed from Rush & Money."
Hyun-seong and Kim Ho-sik, the CEO, listened as he slowly explained what needed to be done.
The War of Shen.
The start of a chicken game that would continue until someone collapses.
"I wish we could deal with them in a straightforward and honorable way, but if that were possible, the Japanese wouldn't have entered. I will use all the power I have. Win at all costs."
If we win this battle, we can cut off the Cheongpung Association's breathing.