Chapter 95: The Tension of Corporate Intrigue

There were rumors that another force intervened in the disbanding of Jungwoo Group last time.

This was inevitable, as the subsidiaries of Jungwoo Group, which had been torn apart and sold to foreign capital, continued to thrive without issues.

“What on earth is the reason for Chairman Park’s arrest? Call the Prosecutor General in here immediately!”

“Yes, Mr. President.”

From early morning, news about various corruptions in Jungwoo Group dominated major newspapers, and reports about the urgent arrest of the conglomerate’s chairman had President Kim Hak-gwon busy trying to grasp the situation.

Moments later, Prosecutor General Yoon Chang-ho entered the Blue House at the call of President Kim Hak-gwon.

“Welcome, Prosecutor General.”

“You called for me, Mr. President?”

“Please, have a seat.”

As Yoon Chang-ho sat down, President Kim Hak-gwon let out a deep sigh.

“What on earth is going on with Jungwoo Group?”

Without hesitating, Yoon Chang-ho answered with the response he had prepared.

“The accounting fraud is extremely serious, Mr. President. If we leave it unchecked, it could become a time bomb that blows up Korea in one go.”

“What do you mean? If such a thing exists, you should report it to me first as the President!”

“I apologize. We were in the midst of preparations, but the media broke the news before we could manage it.”

At this, President Kim Hak-gwon sighed again.

Yoon Chang-ho added firmly.

“Chairman Park Dae-ho could flee abroad at any moment, so we had no choice but to arrest him urgently. The court issued a warrant as soon as they reviewed our materials.”

President Kim Hak-gwon frowned, remaining silent for a while after hearing Yoon Chang-ho’s response.

Eventually, he spoke up with a heavy question.

“Are you thinking of detaining Chairman Park?”

“Yes. If we release him without detention, there’s a considerable risk he might tamper with evidence or cover his tracks.”

“But there are many things Chairman Park needs to do, starting with the gold-collecting campaign. Can’t we find a way?”

In response, Yoon Chang-ho looked at President Kim Hak-gwon with a concerned expression.

“If you give the order, I will comply. However, it may place a significant political burden on you.”

“Isn’t this the honeymoon period? The media won’t publish negative articles about me for now, so… Let’s keep Chairman Park out of jail for now and proceed with the investigation slowly.”

“Understood, Mr. President.”

At that moment, the chief of staff burst in, urgently opening the door.

“Mr. President! You need to see the news!”

“What? What’s going on?”

President Kim Hak-gwon, about to scold him for the sudden intrusion, fell silent at the sight of the chief of staff’s pale face.

Without saying a word, the chief of staff turned on the TV.

We are preparing for a hostile takeover of Jungwoo Group’s major subsidiaries. As the largest shareholder, we can no longer turn a blind eye to Chairman Park Dae-ho’s misconduct, and we have made a decisive decision.

What are your future plans?

We will initiate a public tender for shares of Jungwoo, along with key subsidiaries. We plan to work alongside many investment firms holding Jungwoo’s stock.

On the screen, a woman with an exotic appearance was answering questions from numerous reporters.

The caption ‘Eva Zhu’ appeared at the bottom of the screen.

“What the hell is going on here?”

President Kim Hak-gwon’s jaw dropped as he watched the press conference.

Prosecutor General Yoon Chang-ho focused on the voices of the announcers coming from the TV.

The chief of staff stammered as he replied.

“The press conference is just the beginning. We’ve received a call from the U.S. investment banks to the Treasury Department regarding the government’s stance on Jungwoo Group.”

“What?”

“If the government doesn’t follow through on the agreement…”

Though the chief of staff couldn’t finish his sentence, President Kim Hak-gwon could guess the implications.

“Have the Minister of Finance come in immediately!”

“Yes, Mr. President!”

As the chief of staff hurried out, President Kim Hak-gwon turned to Yoon Chang-ho.

“Let’s think carefully about Chairman Park’s treatment for now. You handle it.”

Yoon Chang-ho nodded with a blank expression.

“Then I will take my leave, Mr. President.”

“Keep me updated on the investigation progress.”

“Understood.”

Rising from his seat, Yoon Chang-ho bowed to the President and turned to leave.

At that moment, President Kim Hak-gwon’s voice stopped him.

“By the way, how severe is the accounting fraud?”

Yoon Chang-ho turned back, his mouth, which had been rigid, opened.

“Currently, it’s revealed to be over 10 trillion won. This is just the tip of the iceberg.”

“Oh…”

President Kim Hak-gwon was momentarily speechless at the staggering amount.

“There are also signs of slush funds being moved abroad. Embezzlement and breach of trust are just the basics.”

“…I understand. You may leave now.”

“Yes, Mr. President.”

After Yoon Chang-ho left, President Kim Hak-gwon buried his head in his hands.

“Chairman Park, what on earth are you thinking?”

While he shook his head and pondered, Minister of Finance Lee Seong-kyu entered through the door.

“Mr. President, you called for me?”

“Minister Lee, please take a seat.”

Lee Seong-kyu, who had served in the bureaucratic era of the 5th Republic, still struggled to avoid calling President Kim Hak-gwon ‘Your Excellency’, despite his request.

“How’s the atmosphere?”

“The Ministry of Finance opposes injecting public funds into Jungwoo Group, using this opportunity to issue a warning to the chaebols. We can’t let the Korean economy collapse while trying to save Jungwoo Group.”

“Oh…”

“Especially, the IMF won’t stay quiet. The promised dollars have not all flowed into the country yet.”

“If a conglomerate ranked third in the business world collapses, we don’t know what the side effects will be.”

President Kim Hak-gwon spoke heavily, and Lee Seong-kyu’s expression was similarly grim.

“What is the Prosecutor’s Office saying?”

“They are saying they will conduct an arrest investigation.”

“While the IMF has provided a second round of support and the immediate crisis is averted, there are still no new investments from foreign investors. If you step in to save Jungwoo Group, which has a chairman risk, no investor may want to invest in Korea anymore.”

President Kim Hak-gwon felt a sense of frustration.

“Who is that woman, Eva, who held the press conference today?”

“She is an investor based in Hong Kong, who entered the country under the name Future Investments before the IMF negotiations were concluded. It’s presumed that she has funds from Hong Kong and the UK backing her. Currently, she is primarily investing in real estate, but… I suspect she will eventually go after corporate acquisitions.”

“What about her capital strength?”

“She is among the top of the foreign capital that has entered Korea.”

Muttering the name Future Investments, President Kim Hak-gwon let out a sound of frustration.

“They say they are going for hostile M&As. How do you think this will play out?”

“It will likely be difficult. Even if they acquire all the stocks released in the market, it will be hard to win since the shares are intertwined among Jungwoo Group’s subsidiaries. However, as time goes on, that could change.”

The circular shareholding structure of Korea’s conglomerates was quite solid.

But it only appeared that way; from the perspective of foreign investors, it was a governance structure with many exploitable weaknesses.

“Over 10 trillion won in accounting fraud has been uncovered in Jungwoo Group. Is this normal?”

Lee Seong-kyu’s face turned slightly pale.

“Accounting fraud among chaebols is not a new issue. Just look at Hyeonbo Group’s case. But 10 trillion… that amount is unprecedented for me.”

“How about disbanding Jungwoo Group and allowing other conglomerates to acquire it?”

The acquisition funds are enormous, and the burden of debts and bad bonds means that large corporations will hesitate to step forward. I can’t speak for some of the sound subsidiaries, but the troubled ones won’t even be considered.

As Lee Seong-kyu shook his head, Kim Hak-gwon covered his forehead with his hand, muttering.

“Are you saying there’s no way out?”

“You know, don’t you? Who could be our white knight in this situation? We need an investor who’s friendly with the U.S. government and foreign capital but has a good disposition toward Korea.”

“Are you talking about Boss Han?”

“Yes, if we can urgently seek his help, and once the Korean economy stabilizes, we might require a buyback from domestic conglomerates. Other private equity firms will sell off any profitable assets immediately after acquisition. Their focus is the capital, not the company itself.”

The conversation between President Kim Hak-gwon and Finance Minister Lee Seong-kyu continued for quite a while.

After finishing his meeting with the President, Finance Minister Lee Seong-kyu got into the official vehicle and made a call.

“Yes, senior. It seems the government won’t intervene to save Jungwoo Group. You can proceed as planned.”

Thanks, let’s arrange a meeting soon.

“You’re too kind. I’ll see you next time.”

A satisfied expression spread across the Finance Minister’s face after hanging up.

Though he was responsible for the Korean economy, Lee Seong-kyu was also a core member of the ‘Mofia.’

As the official vehicle carrying Lee Seong-kyu slowly entered the tunnel,

the future of Jungwoo Group was also drifting into an endless tunnel.

* * *

Ultimately, an arrest warrant was issued for Chairman Park Dae-ho, and he was taken into custody that evening.

For days, the front pages of major newspapers were filled with stories about Jungwoo Group.

“Still no word from the Blue House?”

“No, not yet.”

“You’ll hear from them soon; Eva is doing her job well.”

Eva continued to give interviews to the media, expressing her opinions.

As Jungwoo Group faced turmoil and Eva’s public buyout intentions, the stock market, which had plunged into darkness, began to see a glimmer of hope.

Domestic conglomerates were also eyeing Jungwoo’s subsidiaries to see if there were any viable options, while massive foreign private equity firms showed interest in getting involved, deepening the government’s dilemma.

“The accounting fraud we’ve uncovered is just the tip of the iceberg. Once the Financial Supervisory Service conducts a thorough investigation, those who jumped into the acquisition race will likely withdraw, hands raised in surrender. At least for the sound subsidiaries.”

The accounting fraud at Jungwoo Group was so blatant it could be called a textbook case. Experts were baffled by the sheer volume of absurdly intricate schemes employed.

This was likely the product of dozens of accountants and certified public accountants working together.

It would take a long time for the Financial Supervisory Service to uncover everything.

While the entire nation focused on Jungwoo Group’s failures, other domestic companies continued to go bankrupt.

The government needed to make a quick decision regarding Jungwoo Group.

“When the Blue House contacts us, will I meet them alone? What about you, Mu-hyeok?”

“This time, you’ll have to operate solo, Hyung.”

He patted Han Gyeong-yeong on the shoulder.

No matter how favorable Kim Hak-gwon viewed me, he wouldn’t welcome my involvement.

“We’ll absorb as much of the debt as possible, but only take on what’s manageable for recovery.”

“Okay.”

Taking over Jungwoo Group entirely wasn’t something that could be done in a short time.

With Eva and Han Gyeong-yeong both experts in their fields, the government would have to back Han Gyeong-yeong without my intervention.

It was time to handle the shady dealings while leaving the legitimate matters to them.

“Just wait; it’s going to get more interesting.”

Once the Interest Limitation Act was abolished, many loan sharks from Japan began to enter the domestic market.

Small to medium loan companies unrelated to Cheongpung Group also started flocking to Korea in search of this new, juicy market.

Japan’s legal maximum interest rate was 295%. Their regulations were stricter, ensuring that maintaining high interest rates, as demanded by the IMF, was still a viable market. Now that the Interest Limitation Act was abolished, there was no reason for Japanese loan companies not to come in.

In particular, A&S Financial, backed by the Yamaguchi-gumi linked to Cheongpung Group, started aggressively marketing with a Korean CEO.

A&S Financial was a domestic entity, but J&K Capital, a Japanese firm, owned 99.97% of its shares, effectively making it a Japanese loan company.

With domestic financial institutions tightening operations, ordinary citizens had no choice but to resort to loan sharks, and they were suffering under ridiculous interest rates.

“We’re entering a rate competition with A&S Financial. Offer loans at least 1% less than theirs. Promote refinancing for those who took loans from Rush & Money heavily.”

He slowly explained the tasks ahead to Hyeon-seong and CEO Kim Ho-sik.

The War of Money

A chicken game that would continue until one of them collapsed.

“I wish we could handle this elegantly, but if that were possible, the Japanese wouldn’t have come in. I’ll mobilize all my resources for this. Just make sure to win.”

If we win this battle, we can cut off Cheongpung Group’s lifeline.