In January 1998, Park Sol finalized the negotiation with the government, agreeing to a three-year restriction on capital repatriation, and began establishing the investment company.
With the government's assistance, he easily obtained the necessary permits and gathered his dirty money from all over the world into the designated account, accumulating $1 billion.
An unknown figure named Baek In-hwi was appointed as the CEO. No one had ever seen his face, and there were no records of him entering Korea. But surprisingly, no one, including government officials, seemed curious about his true identity.
The fact that the mysterious funds were pouring in from various countries, not just China, only reinforced their belief that it was a legitimate foreign investment.
The newly established investment company was named Joongang Investment Corporation.
Park Sol, disguised as Chinese capital, had entered the fray, joining the government, corporations, banks, and foreign investors in their scramble for survival.
The news that $1 billion in investment funds had landed in Korea shook the business world.
Companies that had been desperately waiting for the IMF bailout now had a second option: Joongang Investment Corporation. They flooded the company with investment inquiries.
$1 billion, about 2 trillion won, was a game-changer, not just a lifeline. But Joongang Investment Corporation remained on the sidelines, observing the situation.
"Let's invest half in short-term and half in long-term."
Park Jong-bum raised his hand.
"How about focusing on real estate for long-term investments? Real estate prices have plummeted, and if Korea recovers, the profits will be enormous."
"Real estate is not a bad idea."
Maru suggested a different option.
"If it's about capital gains, stocks would be better. The stock market is crashing."
"Stocks are not a bad idea either."
I smiled.
"There's so much to buy, it's almost a problem."
The value of cash and physical assets were inversely proportional.
As the value of cash skyrocketed, the value of tangible and intangible assets, including real estate, plummeted.
"Let's invest about 20% in real estate, focusing on the Seoul metropolitan area, and observe the stock market for now. Real estate won't disappear, but stocks could become worthless. We need time to separate the wheat from the chaff."
"Are you going to reject all the companies' requests?"
"Hmm."
We had been receiving requests for meetings and investments from almost all the major corporations in Korea, except for a select few, but we kept rejecting them, citing lack of information.
"Let's stall for time. Why would we invest now, when companies are collapsing every day?"
The new year had arrived, but the Korean economy was still on thin ice. Four large corporations and thousands of small and medium-sized enterprises had gone bankrupt in January alone.
Even securities companies, once considered invincible, were collapsing, so we couldn't invest recklessly.
The government wanted me to invest the money as soon as possible to help struggling companies, but I didn't have to play by their rules.
We decided to invest a portion in real estate and continue observing the market. As we were about to end the meeting, my phone rang.
"Hello."
[Sir, it's Li Yang. We have a call for Baek In-hwi.]
"For Baek In-hwi?"
The only people who knew Baek In-hwi's phone number were the government officials and a few Assembly members we had made deals with.
"The investment funds have already arrived, and we've finalized the terms. There shouldn't be any reason for them to call. What's going on? Put him through."
After a moment of rustling, the call connected.
"This is Baek In-hwi."
I lowered my voice, and a voice came from the other end.
[Greetings, this is Ahn Seok-gil, Vice Minister of Finance and Economy.]
Vice Minister Ahn Seok-gil had taken over from the Minister I had initially negotiated with and had been in charge of the investment. We had spoken frequently to finalize the details.
"Vice Minister Ahn, what's the matter? Is there a problem?"
He chuckled.
[No, no, not at all. The funds have arrived, but you haven't made any moves yet, so I just wanted to check in.]
I said indifferently,
"It hasn't even been a week. I'm still looking for suitable investment opportunities, so don't worry."
[Haha, of course. I understand you need time to familiarize yourself with the Korean market.]
"Thank you for your understanding."
[So I wanted to offer you some assistance…]
"Assistance?"
[Yes, I have a good investment opportunity I'd like to recommend.]
I was about to decline, thinking some companies had asked him for favors, but he continued,
[How about investing in a bank?]
"A bank? You're suggesting I invest in a bank?"
[Yes, there's no safer investment than a bank. There's a bank facing some financial difficulties, and they're looking for investors with favorable terms.]
"A bank, huh."
The idea intrigued me.
Many banks were struggling due to the bad loan crisis, but the "too big to fail" theory applied to banks as well.
When a chaebol went bankrupt, the government considered various factors, such as the impact on the national economy and the possibility of recovery, before deciding whether to save them or let them fail. But it was different for banks.
Banks were the heart of the modern capitalist economy, the blood that circulated money through all levels of society, from ordinary citizens to large corporations.
All financial transactions, from deposits to loans, were interconnected, so even a temporary suspension of operations could have a devastating impact.
For the government, maintaining stability was paramount, and banks were the top priority.
[It might seem risky now because of the financial crisis, but it's just temporary.]
"Is equity investment possible?"
He hesitated.
[Equity… investment?]
"Yes, banks are essentially in the business of handling money. It's called investment, but they're just managing our money. The interest rates are low, so the returns aren't that great. I'm not interested unless it's an equity investment."
The market interest rate had risen due to the IMF's demands, but it was still around 30% per year.
The interest we would receive would be even lower, and I wouldn't have bothered bringing in the funds with a fake identity if that was all I was aiming for.
But equity investment was a different story.
The risk was lower than investing in other corporations, and there was the potential for capital gains from stock price fluctuations.
[Equity investment… I can't give you a definite answer. It's a sensitive issue.]
The ownership structure of banks was strictly regulated and monitored by the authorities.
And foreign investment in banks was even more sensitive.
I said with interest,
"I'll consider it if it's an equity investment. A bank would be privy to the latest economic trends, so it would be helpful for gathering information."
[Hmm…]
After a moment of thought, Ahn Seok-gil said,
[How about meeting with the bank's president? I can arrange a meeting.]
"That would be great. But I can't go in person. I'll send someone from our side. Which bank is it?"
[Hanho Savings Bank.]
***
"How did it go?"
Jang Yoo-cheon, whom I had sent to meet with the president of Hanho Savings Bank and Vice Minister Ahn Seok-gil, said,
"It went well. I received the documents necessary for the investment."
Jang Yoo-cheon was a former heihaizi and one of the most loyal members of the Park Sol squad.
He had been arrested after a dispute with his former employer over unpaid wages, and I had happened to hear about it and bailed him out. I was impressed by his honesty and loyalty and had appointed him as one of Baek In-hwi's close aides.
He handed me the documents and said,
"I didn't understand everything, but they're offering a 5% stake for $100 million."
"$100 million is about 200 billion won. Hmm."
I was interested in acquiring a stake in an unknown bank for several reasons.
First, Baek In-hwi's Joongang Investment Corporation would operate as a speculative investment company.
Acquiring a stake in a bank would allow us to learn about investment strategies and gain access to valuable information for future investments.
Second, the government was desperate.
They assumed I was considering investing another $9 billion after the initial $1 billion, so they would recommend a safe and profitable investment opportunity.
I needed to make a decent profit from the first investment to encourage further investment.
I opened the financial statements Jang Yoo-cheon had given me.
"Total assets of 20 trillion won, equity of 2 trillion won (10%), total loans of 17 trillion won, and bad debts of 2 trillion won."
I had consulted experts and done my research after becoming interested in banks, and these numbers indicated a very healthy bank.
2 trillion won in bad debts was a significant amount, but it was considered low in the current climate.
Banks like Korea First Bank, which had been directly hit by the Hanbo incident, had bad debt ratios of 20-30%.
That's why the financial statements seemed even stranger to me.
"It's too healthy. Sufficient equity, and the bad debt ratio is only around 10%. Why would such a healthy bank sell its shares to a foreign investor like Joongang Investment Corporation?"
I stroked my chin suspiciously.
"This is strange. I expected the government to recommend a good investment opportunity, but this is too good to be true."
It was hard to believe that such a healthy bank existed amidst the widespread bad debt crisis, and even if it did, there was no reason for them to sell their shares to me.
"Something smells fishy."
I chuckled.
"Are they taking us for fools?"
"Is it that strange?" Park Jong-bum asked.
"Yes, very strange."
"Maybe the government really did find a good investment opportunity for us."
"No, absolutely not. A good investment opportunity is a company that's struggling with short-term financial difficulties but has long-term potential. We invest in them, they overcome their difficulties, we make a profit from the favorable terms, and the government saves a promising company with our money. It's a win-win situation for everyone. But this bank…"
I tapped the financial statements.
"They're already doing well. They don't need our help. They have ulterior motives."
I smiled coldly.
"They're underestimating us. They think we're clueless about the Korean market because we're Chinese, but this is too obvious."
Jang Yoo-cheon, sensing the tense atmosphere, took out a camcorder from his briefcase.
"I secretly recorded the meeting as you instructed."
I couldn't go myself, so I had sent Jang Yoo-cheon, but a deal wasn't just about words.
Reading a person's body language and behavior was essential in business.
"Good work. Go back and wait for further instructions. Maintain secrecy at all times. Understand?"
Jang Yoo-cheon bowed deeply.
"Yes, sir. I'll take my leave."
He left, and I inserted the videotape into the camcorder and started watching.
Two middle-aged men were sitting across from Jang Yoo-cheon, explaining the benefits and rationale of investing in their bank.
Maru pointed at the man who was doing most of the talking.
"That must be the bank president. And the one next to him is Vice Minister Ahn Seok-gil."
"Probably."
Since Jang Yoo-cheon didn't speak Korean and was unfamiliar with the situation, the video only showed the bank president and the Vice Minister explaining, with the interpreter translating for Jang Yoo-cheon.
After the video ended, Park Jong-bum said with a suspicious expression,
"Now that you mention it, sir, there are a lot of strange things. It doesn't make sense for the president of such a healthy bank to be so eager to sell his shares."
Maru nodded.
"I agree."
While they were voicing their concerns, I was staring at the Vice Minister, not the bank president.
I had spoken to him on the phone frequently but had never seen his face until now.
And he looked strangely familiar.
"I've seen him somewhere before. What is it? He looks so familiar."
Maru also examined the video closely.
"You're right! Now that you mention it, he does look familiar."
Park Jong-bum said,
"He's the Vice Minister of Finance and Economy, he must have been on the news. That's probably why he looks familiar."
"Is that it?"
But I wasn't the type to remember the faces of Vice Ministers from the news.
I shook my head.
"No, I don't think so. It's not from the news."
I narrowed my eyes.
"Where have I seen him before?"