The House of Cards, Sunyang Family 1
“Did you have a good trip to the States?”
“Yes.”
“You were there for quite a while. Was it related to the recent crash in the U.S. stock market?”
“Yes, it was. But I assure you, it wasn’t my doing.”
“You don’t have that kind of influence, do you? Just a prince from the outskirts, after all. Haha.”
Chairman Lee Hak-jae’s laughter didn’t quite reach his eyes. Was something troubling him?
“The Korean stock market is a mess too. If there’s anything I need to know, tell me now. Don’t come blaming me later.”
“There might be liquidity issues, but I’ll make sure that’s not a problem.”
“Having a solid backer to solve money issues is a game-changer for any business. So, should I stop worrying?”
“Yes. But is something wrong? You seem a bit off.”
Chairman Lee rose from his desk and sat on the sofa next to me.
“Vice Chairman Jin Young-ki is about to cause a major incident. No, it’s certain.”
A major incident? I couldn’t help but sigh. What scheme is he up to now?
“Is he plotting another holding company scheme? Without the joint voting rights from Vice Chairman Jin Dong-ki and me, it won’t be easy.”
“No, this time it’s about succession.”
“Succession?”
Chairman Lee nodded.
“I’ve heard he’s started the process of transferring shares to his son. The planning department is working on it secretly.”
“To Young-jun?”
“Yes. You know transferring shares isn’t like handing over a house. It takes a long time to prepare, so it’s not too early. Young-jun is already forty.”
I hadn’t seen him in so long, I’d forgotten. He’s already forty.
“I can’t quite grasp it. Since it’s just Uncle’s shares moving, it shouldn’t be a variable, right?”
Chairman Lee didn’t answer easily. It was a complex issue.
“Think of it this way. If Young-jun sets up a corporation like you use Miracle, and Vice Chairman Jin sells part of his shares to that company?”
“The shares sold would be from an unlisted company, right?”
“Exactly. But that unlisted company would hold a lot of Sunyang Group’s shares.”
“Then the value of the newly established corporation would skyrocket.”
“Right. The problem is, even with just 51% of those shares, Jin Young-ki would still control the group. By funneling work to the new corporation or just skimming off the top, the performance would soar.”
“And if they list that corporation, they’d rake in a fortune. They only need to put 49% on the market.”
This way, they create numerous obscure companies holding shares, profiting from Sunyang Group’s earnings.
“They’ll surely start a second phase with that money. It’s the method I used.”
Issuing convertible bonds and allocating bonds with warrants at low prices is the second phase.
“Is there no chance their shares will increase?”
“It’s hard to say. They might strip the core from lower-tier affiliates, leaving just the shell. Those affiliates are quite detached from controlling shares.”
He spoke with uncertainty.
“That can’t be all, can it?”
“Honestly, I don’t know. If a sharp mind finds a loophole, they might use a new method. I’ve been out of that game for a long time. The laws must have changed a lot too. A brilliant idea can be a huge variable.”
Many thoughts crossed my mind.
Maybe it’s better if Young-jun holds the shares. He’s easier to deal with than his father. Wealthy families tend to become more difficult and impatient with each generation. They’ve been raised that way since childhood.
But if something unexpected happens, as Chairman Lee suggested, that would be a disaster.
Should I stop it?
“Chairman, when you can’t predict what might happen, isn’t it better to stop it early rather than watch it unfold?”
“Are you saying we should block the succession process? How?”
I smiled at Chairman Lee’s surprised expression.
“Chairman, could you make one last appearance at the prosecutor’s office?”
“What?”
“This time, for a different reason. Not as a suspect, but as a witness. Instead of saying you don’t remember or don’t know, you tell them everything you recall. As a witness.”
“What on earth are you talking about?”
He seemed about to have a fit at the mention of the prosecutor’s office. I quickly waved my hand to calm him.
“Think of it as paying overdue taxes. If Vice Chairman Jin Young-ki had to pay taxes on the inheritance from his grandfather, what kind of face would he make?”
“Are you serious?”
Chairman Lee had already caught on to my plan.
“I’m willing to negotiate with the tax office. But Vice Chairman Jin would face double the taxes due to two succession processes. Of course, if he tries to avoid taxes, more shady dealings will come to light.”
“You might end up paying billions in taxes too.”
“Hasn’t it always been like that? When there’s a problem, we hold a press conference to apologize, donate a few hundred billion instead of paying fines. But if I say I’ll pay taxes, it’ll have more impact. I’m willing to throw in five hundred billion.”
Donating under the guise of social contribution is better than paying taxes.
Taxes set a precedent and become a hurdle for future succession processes. It also draws constant comparisons with other conglomerates’ succession processes, leading to endless tax issues.
Conglomerates should leave a precedent of not paying gift and inheritance taxes.
“So, what do you gain from this?”
“I gain a lot. First, public applause.”
“What are you going to do with that? Become the first third-generation chaebol celebrity?”
“Of course not. Public applause pressures politics. When politics is pressured, officials move.”
Chairman Lee chuckled.
“The tax office won’t be able to stay still. Haha.”
“It’s all about timing. I’ll hold a press conference at the most opportune moment. I’ll show the duty of voluntary tax payment as a citizen.”
“That timing would be when Sunyang Group’s funds dry up, right?”
“Yes. It won’t be long. When the U.S. financial system collapses, Sunyang will face a drought.”
Those who handle money are not only shameless but also ruthless villains. In contrast, the general public is naively innocent.
Just like during the IMF crisis a decade ago, they’re being deceived again. The U.S. was losing five trillion dollars due to the subprime mortgage crisis, and tents of the homeless were popping up in New York’s Central Park, yet Korea’s KOSPI index was surpassing 2,000, hitting record highs.
Investment firms and financial companies were showcasing Korea’s economic stability until they could offload their ticking time bombs onto the unsuspecting public. The media and politicians echoed the same message, selling off securities with expired lifespans to the naive.
Moreover, with the presidential election around the corner, there was no better time to hide the U.S.-originated financial crisis.
The common people, who had never experienced good times, were the ones who believed in the candidate promising to revive the economy and create three million jobs.
Without mentioning the U.S. financial crisis, the candidate who promised 7% economic growth and received overwhelming support from the common people was elected president.
Before the president even took office in January 2008, the international oil price (WTI) surpassed $100 per barrel for the first time at the New York Mercantile Exchange, causing prices to soar, but the news was dominated by the Sungnyemun arson incident.
Before the presidential inauguration oath, “I will uphold the Constitution and protect the nation,” was even completed, the U.S. dollar plummeted.
Korea began to feel the impact of the U.S.-originated financial crisis when the bankruptcy of Bear Stearns, the fifth-largest investment bank in the U.S., became known.
The wealthy were the first to acquire information quickly.
Jin Tae-jun, who burst into my office, was trembling to his fingertips but tried to maintain a facade of calm.
“You’re having a tough time these days, aren’t you? I wish I could help, but there’s not much I can do.”
“I’m really losing it. I’ve been idle for so long. You know? Sunyang Investment and Securities have been completely withdrawn.”
“I heard the rumors. All the employees have used up their vacations, right?”
“Yeah. What’s the point of working? Everything crashes as soon as you touch it.”
“Still, compared to other groups, your performance isn’t bad. The losses are minimal, and you’ve defended the stock price well.”
“Isn’t it ironic? We thought we’d stay in the middle if we did nothing, so we’ve been idle since the third quarter last year. But we’re industry leaders. Not because we’re good, but because others are worse. Haha.”
Jin Tae-jun kept watching me, gauging my reaction.
“But Tae-jun, do you have something to tell me? You don’t look so good.”
He swallowed hard and spoke with difficulty.
“Actually, I have some investments that are causing trouble.”
According to Vice President Jang Do-hyung’s report, Jin Tae-jun had offloaded a significant amount of stock when funds were pouring in last September. Of course, he suffered massive losses.
“What kind of investment? It’s not financial derivatives, is it? Wait a minute.”
As I reached for the phone, Jin Tae-jun’s eyes widened.
“Who are you calling?”
“The president of Sunyang Investment. I need to check your transaction records.”
“Do, Do-jun. Hang up. They don’t know anything.”
Of course. Now the truth comes out.
“Really? So you used another company besides Sunyang?”
“Not exactly… I diversified. I sold everything I entrusted to Sunyang. But when the stock price rose around October last year, I reinvested. Sunyang had a negative outlook, so I traded with another company.”
Selling at a loss only to watch the stock price rise afterward—it’s enough to make anyone regretful and eager to jump back in. Classic behavior.
Even the once-reliable Tae-jun has discovered the thrill of gambling. Isn’t it said that losing makes it even more exciting?
“Now, you can’t even sell it for peanuts, can you?”
Jin Tae-jun nodded weakly.
Just how much has he lost, and where did that money come from?
The fact that he came to me, knowing full well I’m not someone to trust, means he must have dipped into company funds.
He’s desperate to cover it up, but with no way to conjure up the money, he’s grasping at straws by coming to me.
“Tae-jun, I get that you’re in a bind, but there’s nothing I can do. Every financial product and fund is trash right now. Think of it as selling scrap metal and get rid of it quickly. Soon, you won’t even get scrap prices.”
“I know. I wasn’t planning to dump it on you.”
“Then what?”
“Can you lend me some money? Just between us, not through the company.”
I quickly calculated. Is there anything I could gain from lending him money?
If I leave him be, his embezzlement will come to light, and there’ll be chaos again…
“Why not go through a bank? I don’t know how much you need, but private loans are a bit… risky.”
“Do you think a bank will lend me anything right now? They’re all too busy putting out their own fires.”
His face grew increasingly grim.
“How much are we talking? Did you sink tens of billions?”
His hesitation suggested it was in the hundreds of billions.
“Tell me. I can’t help if I don’t know.”
“I need 60 billion urgently. That should cover it.”
Sixty billion, just to cover the urgent part? So, he’s taken 60 billion from the company.
Of course, I’ll lend it to him. When it comes to taking down Sunyang Construction, 60 billion is like a hand grenade.
And you can never have too many explosives.