That’s Right: When You’re in a Hole, Keep Digging
by Brendon Carr
Business-friendly Pres. Lee Myung-bak has surrendered to the street protestors, and it looks like they’ll get their wish for autarky. What makes me say this?
Foreign investment interest in Korea has all but evaporated, and your international reputation for rule of law has been made a joke by your continued legal harassment of Lone Star Funds? Trying to convince foreign investors with the Big Lie that everything’s okay, and Korea welcomes foreign capital to its “level playing field”?
Although I am sure this will get me in trouble with Korea Law Blog reader H. Chang, I’ve got just the ticket for the Korean government: Even though you’ve lost your attempt to pin criminal liability on the foreign capitalists where no crime occurred (at least one of the Lone Star-related cases), and can’t sandbag anymore on the sale of Korea Exchange Bank to HSBC, go ahead and resuscitate past (failed) attempts to characterize Lone Star Korea as a permanent establishment of Lone Star Funds in the U.S.
That way, you can be seen to be attempting to ignore principles of law to “inevitably” seize US$1.2 billion dollars from a foreign investor you’ve tormented and unnecessarily demonized for years, just as the whole sorry affair was fading into the rear-view mirror!
While you’re at it, be sure to declare that foreign capital won’t be welcome, because of “negative public sentiment” when you privatize state-owned companies. That’s sure to help—if what you want is to chase away foreign investors.
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You’ve pretty much hit all the hot buttons with your post. If I could add one more tidbit, Fleishman-Hillard is getting $800K to convince the skeptics that Seoul is a world banking hub.
The money quote: “Tanya van Soest...explained that...Seoul’s potential to become a finance center was not currently recognized internationally.” [Ellipses mine.] That’s the understatement of the year. Anyway, I wish Tanya and FH the best of luck; but if you put lipstick on a pig, it’s still a pig.
Lonestar is still a carpet bagger.
I thought I should commend you on your correct assumption that I am a parodist. Surprising how blatant one’s act can be without others coming to the same conclusion.
swlee—If you want me to keep it under wraps, I’d be glad to delete your comment’s latter portion. I have a fine appreciation for parody and satire, but part of the game is playing it straight.
Digging Fool
It’s not enough to keep digging the hole deeper. You’ve got to keep digging while being informed by others that there is no treasure, oil or water down there, and in fact you’re in deep enough that you can’t throw the dirt out, only have it fall back down on you. Aside from making yourself look foolish, you might even bury yourself!
Brendon,
Thank you for keeping this story in the spotlight. The Lone Star/KEB imbroglio is just the most recent example of how hard it is for old Korea hands (and friends of Korea) to keep trying to convince foreign clients that Korean law has moved beyond the bad old days of third world parochialism. (Full disclosure requires, though, that you inform readers that Hwang Mok Park represents parties in the litigation.)
The comment left by <swlee>, though, is emblematic of this dated thinking. For those ignorant of the history of the LS/KEB deal, it should be recalled that when Lone Star acquired a majority stake in KEB in 2003, KEB was on the verge of bankruptcy. Moreover, no one else wanted it. KEB had been looked at by Bank One, BNP, Citigroup, Credit Suisse, HSBC, JPMorgan, Newbridge, and Standard Chartered, and none of them wanted it Lone Star rode to the rescue, and not only bought KEB with the government’s blessing, but in the process almost certainly prevented another financial crisis in Korea.
I suspect a great deal of the anger directed at Lone Star stems from the fact that (1) KEB was and had been something of a jewel in the crown of Korea’s financial system for the last three decades, and (2) Lone Star made a truly incredible amount of money on the deal once it turned the bank around.
But make no mistake: the government’s attempt to undo this deal has already hurt Korea’s reputation in the international financial community. Once again, Korean perfidy has proven to be the country’s own worst enemy.
Cheers,
David Barch
Sure, thing, Dave. Readers: Hwang Mok Park P.C. represents Lone Star Korea representative Mr. Paul Yoo in his criminal defense (now on appeal to the Supreme Court) of charges of various alleged misconduct, including supposed stock-price manipulation in connection with Korea Exchange Bank’s 2003 acquisition of KEB Card Service Co., Ltd., its failing credit-card unit. He’s innocent.