Chapter 70: The Second Confrontation
“Are you weak? Does it not matter if the Ajin Group acquisition falls through?”
Grandfather’s brow was furrowed with intensity. He wasn’t surprised or flustered; rather, he seemed a bit angry. Is this the face he makes when threats don’t work?
“Did you think lightly of acquiring Ajin Group? Were you planning to give up if things got tough?”
Ah, so he thinks I appeared ready to give up easily. My grandfather despises the word ‘give up’ more than anything.
“Of course not. Do you think I can’t acquire Ajin Group if the merger fails?”
“That’s the first condition of the acquisition.”
“Situations change. Right now, it’s a ‘state of emergency.’”
“Some things don’t change.”
“What?”
“My influence, for one. If I break the merger and make a few calls to the creditors, banks, the Blue House, and the National Assembly, the acquisition decision will be nullified. Then there will be a re-bid, and Chairman Joo of Daehyun Group will be calling me for a drink.”
How many days until the government officially announces that the Deputy Prime Minister has applied for IMF bailout funds? It must be late November. Only then will the Chairman of Sunyang Group realize that his influence is utterly ineffective.
“Grandfather.”
“What? Are you starting to feel nervous?”
“The government poured $11 billion into the foreign exchange market, yet the exchange rate is still skyrocketing. Did you see the Bloomberg article? Our country’s available foreign reserves are only $2 billion. Deputy Prime Minister Kang openly asked for loans from allied countries on TV.”
“Are you saying my power has diminished because of the foreign exchange crisis?”
“No, it hasn’t diminished. It’s gone.”
“What?”
Today, I saw the most surprised expression on my grandfather’s face.
“We’re entering a time where even finding our own way will be difficult. Do you think your calls will have any effect? You need to take this emergency situation more seriously.”
He couldn’t say a word. Now it was my turn to threaten.
“If your influence does lead to a re-bid, it would actually be a favor to me. No one else would bid, and Miracle would be the sole bidder. Don’t you think the creditors would bow to me if I offered $800 million for a $1.2 billion acquisition?”
Grandfather remained silent, his lips tightly sealed.
“Chairman Joo of Daehyun Group must be relieved right now. If he had poured $1.2 trillion into Ajin and had no cash left, he’d be in quite a bind.”
“Do-jun.”
“Grandfather, just a moment. Let me say one last thing.”
He nodded.
“Somewhere in your heart, you must be hoping that this emergency will soon improve. But… that’s not going to happen. If you look at the facts, you’ll see that our country can’t avoid this crisis.”
If what needs to collapse doesn’t, it creates anxiety. That was the sentiment of not just Chairman Jin, but everyone. Yet there was a vague belief that an economy the size of South Korea’s wouldn’t easily fall. This belief was suppressing the anxiety.
But now, my grandfather’s expression changed. He had abandoned that belief.
“You’re certain?”
“Yes. Something monumental is about to happen, and it’s only a few days away.”
“Does that mean our Sunyang Group needs the $1 billion you have?”
“Our country’s foreign reserves are only $2 billion. I hold half of that, $1 billion. The moment that money enters Korea, every bank and company will rush to Miracle’s office.”
“Then I suppose I’ll need a ticket to meet you.”
“You’re number zero, Grandfather. You’re meeting with me right now, aren’t you?”
After a moment of contemplation, Grandfather spoke very slowly.
“I should call Lee Hak-jae and give him a good scolding, then have another talk with my grandson.”
For the first time, I saw him take a step back. It’s impressive, really. Not many conglomerate chairmen would listen to their young grandson.
But I can’t let him retreat so easily.
“Grandfather, I’m not amused anymore.”
“What? Are you mocking your grandfather just because you have some dollars?”
“I’m serious. I need to wrap up the Ajin Group acquisition quickly. I have a lot to do. I need to find companies to scoop up with my dollars and negotiate prices.”
His second look of surprise. A strange sense of pride welled up in me. This was the founder of Sunyang Group, a legendary figure to me. The small thrill of having bested him, even for a moment.
“How much money do you actually have?”
“I can’t show you my entire wallet, but it’s enough to pocket Woosung Motors.”
“Woosung? Are you serious?”
“Yes. I’ll bundle Ajin and Woosung together. Add Sunyang Motors, and we’ll be on par with Daehyun Motors.”
I stood up, pushing my chair back.
“I’ll wrap them all up and put the Sunyang Motors sign on them. Consider it another gift from your dutiful grandson.”
Grandfather began to look at me with a burning intensity.
“I’ll await your second proposal. Figure out how much time you have left in your meetings… and please make a quick decision before the line gets longer.”
“That’s a weak threat.”
He said, stopping me as I was about to leave the study.
“It’s not over until it’s over. Wasn’t that something you said? It’s not complete nonsense.”
“Knowing when to step back is also important. That’s something you said yourself.”
“That’s complete nonsense. Ha ha.”
His hearty laughter left me with nothing but a sigh.
As soon as his grandson left the study, Chairman Jin picked up the phone.
“Hak-jae, come to the house immediately. Bring the presidents of Electronics, Life, Motors, Trading, and Construction. Hurry!”
After hanging up, Chairman Jin couldn’t sit still and began pacing the study.
The crisis his grandson spoke of. He felt it too, but the scale and depth were different.
A temporary difficulty due to foreign exchange depletion was nothing new. The government had always borrowed dollars from the U.S., Europe, or Japan or resolved issues through currency swaps.
But his grandson said this time was different. Economic powers wouldn’t lend money or exchange currency. If $2 billion was truly all the foreign reserves, it was like having plenty of food but no water.
You wouldn’t die of hunger, but of thirst.
Knock, knock.
“Chairman.”
With a knock, people began to pour into the room.
“Trading and Electronics! Inform all departments. From today, hold onto any export payments in dollars, and borrow to make payments. And Construction.”
“Yes, Chairman.”
“Bid 10%, no, 20% lower on overseas projects. But get the contract money or interim payments as soon as possible. And Life.”
“Ah, yes, Chairman.”
“Withdraw all investments in overseas financial products. I don’t care about penalties. Cancel everything and secure dollars.”
“Chairman, the losses would be too great. The management balance…”
“Shut up and withdraw everything. Pass the losses onto the customers.”
They understood why the chairman was acting this way, but it was extreme. It was as if he was planning to flee in the night with cash before a bankruptcy.
“Chairman, please calm down…”
Lee Hak-jae cautiously spoke, and Chairman Jin stopped and began to breathe heavily.
“We’re already fully prepared. All foreign exchange across subsidiaries is under strict control.”
Chairman Jin shook his head vigorously.
“Thorough preparation isn’t enough. Prepare as if you’re ready to lose a limb. Understood?”
“Chairman, have you spoken with the owner of Miracle?”
“Who?”
“The Miracle holding $1 billion.”
“Yes.”
When Chairman Jin nodded, everyone’s faces darkened.
Something had gone wrong.
The lifeline of $1 billion wasn’t coming.
“Did they refuse?”
“I… made money even during the Korean War. I wasn’t afraid of war. But… now I’m scared.”
An unexpected answer.
Even in the face of thunder and lightning, he wouldn’t flinch. How bad must it be for him to feel this way?
“The one holding the dollars is even more so. He didn’t even blink while threatening me. I’ve never met anyone tougher.”
Lee Hak-jae, who had watched Chairman Jin closely, couldn’t believe it.
That there could be someone tougher than Jin Yang-cheol in this world.
“Dae-ho.”
“Yes, Chairman.”
“How much of the subsidiary shares does Motors hold?”
“We always maintain 12%.”
“Hak-jae, if we push the limits of defending management rights, how much can we raise the shares Motors holds?”
It was a question President Jo Dae-ho had never anticipated, but Lee Hak-jae immediately provided a number.
“We can raise it to 17%. Beyond that, we’d have to touch Sunyang Life’s shares, which would require restructuring the entire group’s shareholding structure.”
“We don’t have time for that. Be ready, and when I signal, move.”
“Yes, Chairman.”
No one had any idea what was happening. But they could feel the dark clouds gathering over the once impregnable Sunyang Group, and the cracks beginning to form.
On November 19, 1997, Im Chang-yeol, appointed as Deputy Prime Minister and Minister of Finance and Economy, expressed a strong determination to resolve the current crisis without going to the IMF.
But two days later, on the night of the 21st, he held an emergency press conference to announce the application for IMF bailout funds, citing demands for improving the balance of payments, stabilizing currency value, liberalizing trade, opening capital markets, and enhancing corporate transparency. The next day, President Kim Young-sam delivered a special address to the nation regarding the bailout application.
It was the beginning of the IMF era.
South Korea’s national credit rating had dropped, and the stock index had fallen below 400. Nine financial companies were ordered to suspend operations, and the Halla Group had gone bankrupt.
And then…
The phones at Miracle Investment and Oh Se-hyun’s cell were ringing off the hook.
“Look, Mr. Bank President! We need to finalize the merger before we can transfer the acquisition funds, don’t we? Check the contract. The negotiation deadline is February next year. We’ve got plenty of time. And why are you insisting on dollars? We’ll pay the 1.2 trillion in Korean won, so just keep that in mind!”
Oh Se-hyun hung up the phone with a frustrated sigh.
“Was that from Jeil Bank?”
“Yeah, it’s chaos over there. They’re whining a dozen times a day.”
“If they made a bold offer while whining, I might at least consider it.”
“Exactly. A bank president acting like a child. Unbelievable!”
Oh Se-hyun shook his head in disbelief.
“But what about you? Is Chairman Jin still crunching numbers?”
“Yes. It seems he’s not planning to cut me any slack just because I’m his grandson. He’s relentless.”
“Well, that’s what makes him a chaebol, right? You’re no different, always scheming to squeeze a bit more out of your grandfather…”
Oh Se-hyun chuckled and moved closer to me, wearing a friendly expression.
“But Do-jun, what if the exchange rate goes up even more, say to 2,000 won?”
“That would be fantastic. Our 3 trillion would turn into 5 trillion, wouldn’t it?”
“Exactly. You’re a 5 trillion won asset holder. And you’re only twenty. How does that feel?”
He nudged my shoulder playfully.
“Don’t get my hopes up. I’m dying to take that money and live like a European aristocrat.”
“Why not do it, then?”
“Uncle, what’s better: being a wealthy European noble or a Korean chaebol chairman who can influence the country?”
Oh Se-hyun smacked his lips and leaned back in his chair.
“Ah, you’re no fun.”
“Just wait a little longer. I’ll become a Korean chaebol chairman, and I’ll make sure you can enjoy retirement like a European noble.”
While the entire country was in mourning due to the IMF crisis, the two of us were lost in cheerful daydreams, sharing a laugh.