Battle Erupts Over AIG's Foray Into Group

Hyundai Group is accusing the government of using pressure tactics as Seoul and an American investor seek ways to normalize the operations of the conglomerate's financial affiliates.

The Financial Supervisory Service opened a surprise investigation Friday into Hyundai Securities. Seoul will also start talks at the end of this month with American International Group, a U.S.-based financial services provider, on the normalization of operations of Hyundai Investment Trust and Securities. The American investor is set to acquire one or more of the group's three financial affiliates.

Hyundai Group has protested the government's moves, saying Seoul is pressuring the firm to give up its management rights to Hyundai Securities.

The government claimed the surprise inspection of Hyundai Securities was only an attempt to understand the sale of Hyundai Investment Trust Management, since Hyundai Securities is managing the sale. But the inspection suggested Seoul is setting the stage for AIG to buy the securities firm, analysts said.

After AIG completes a due diligence of Hyundai Investment Trust and Securities next week, acquisition talks are scheduled to begin May 28. But large gaps still separate the government, the American firm and Hyundai Group, indicating struggles ahead.

Hyundai Group contended that Seoul's actions are in effect a demand that Hyundai give up its stakes in Hyundai Securities after calling on the group to account for its mismanagement.

Hyundai Merchant Marine, with a 16.65 percent stake, is the majority shareholder of the securities firm. While the government denies the accusations, Hyundai Merchant Marine has hinted that it may sell its holdings if Hyundai Securities' stock rises due to its rescue plans, further feeding the confusion.

by Kim Si-re