[EDITORIALS]AIG Snag Smells FamiliarA deal to sell Hyundai Investment Trust & Securities Co., ran into a snag, just one day after a memorandum of understanding, or MOU, was signed. The news was taken bitterly across Korea, since the nation has a number of troubled companies whose owners want to sell to foreign investors.
It is difficult for us to learn why a consortium led by the American International Group suddenly said that Hyundai Securities Co.'s decision to sell its preferred shares for 8,940 won ($6.97) per share to the consortium was unacceptable, after it agreed to buy Hyundai Securities. If it is only a psychological tactic of AIG to take the initiative in negotiations for the contract, then it is understandable.
But the Korean government, which had been criticized for a dirt-cheap sale of the Hyundai group's financial units, became embarrassed further. The government allowed Hyundai Securities' plan to sell its preferred shares at a 10-percent lower price than the share's market value and to grant voting rights on the preferred shares. It is clear that the government gave preferential treatment, through interpreting securities-related laws as advantageous to the buyer of the shares as possible, to amicably settle the negotiations. Accordingly, the AIG consortium's attempt to lower the price further is blamable.
If a negotiator has too great a desire for a settlement, he will become overwhelmed by the other party and terms will turn disadvantageous. The Korean government is still putting public funds into the Korea First Bank, because the government showed such weak points in its negotiations for sale of the bank and similar cases ensued in the course of financial sector restructuring. The government's negotiation skills has not improved. In the negotiations with the AIG consortium, Seoul fidgeted over lingering negotiations. The government seems obsessed with a sense of obligation to settle deals for the sale of Daewoo Motor Co. and Seoul Bank, and thus to remove doubt about Korea's declining economy.
Considering the hard situation of the Korean economy, economic ministers are turning more confused over policies. Whenever a good piece of news regarding the economy is likely to appear, the government is never taciturn. Maybe it is because Seoul is tired giving only bad news almost every day. In the case of the negotiations to sell Hyundai Securities, the government had said for a month that the negotiations would be settled soon. Last Thursday, when Seoul announced that it signed a MOU with the AIG consortium, Jin Nyum, the deputy prime minister, said that morning that the government would make the announcement during the day. Accordingly, economic ministers are open to criticism that they handle matters with more haste than caution, in order to proudly give a good news. Many problems still await negotiations for the sale of Hyundai Investment Trust & Securities. Accordingly, it is difficult to forecast a result. The government insisted that many of the MOU terms had already been agreed upon and that the negotiations were different from other deals in the past. But the possibility that the negotiations will rupture, already appeared. In addition, minority shareholders in Hyundai Securities are considering making an objection to the sale of the preferred shares, in cooperation with the People's Solidarity for Participatory Democracy, because the issue of the shares will cause decline in the brokerage's share price.
In negotiations, multiple channels should be left open and the government should not be overwhelmed by a negotiating party.