Swiss ask Blue House’s aid in business dispute
According to government sources on Monday, Jorg Alois Reding, the Swiss ambassador in Seoul, recently met several Korean government officials, including An Chong-bum, senior presidential secretary for the economy, to request a solution to a dispute between Hyundai Elevator and Schindler.
Hyundai Elevator is the de facto holding company of Hyundai Group and the largest stakeholder in shipping unit Hyundai Merchant Marine (HMM).
Hyundai Elevator has been helping HMM through a liquidity crunch, which annoys Schindler, the second-largest shareholder of Hyundai Elevator. Schindler says Hyundai Elevator’s financial help is harming itself and Schindler’s investment.
Reportedly, the ambassador also sent a letter to the Financial Services Commission (FSC) asserting that Hyundai Elevator’s unreasonable support was causing damage to Schindler.
“All I can say is that I am trying to help create an environment in which the two sides [Hyundai and Schindler] can make a good and productive business together,” Ambassador Reding told the Korea JoongAng Daily in a phone interview.
When asked if he met any executives of Hyundai to resolve the problem, Reding said, “I can’t answer that question since I don’t make comments on things like whom I met or where I went when it involves business.”
“What we know is that An met the ambassador to listen about difficulties affecting a foreign investor,” a spokesman for the Ministry of Trade, Industry and Energy said on the condition of anonymity. “But we think the possibility is zero that the government will intervene in a business activity operated by two private companies.”
The competition was between Hyun and the younger brother of late Hyundai Group founder Chung Ju-yung, Chung Sang-young. He was attempting to gain control of the elevator company through the company KCC.
Schindler swooped in as an ally of Hyun and bought a 20 percent stake in Hyundai Elevator.
The relationship further deepened when Chairwoman Hyun and Schindler Holding AG Chairman Alfred Schindler announced a strategic partnership at Mount Kumgang in 2007.
But in 2010, the Swiss elevator company opposed Hyundai Group competing against Hyun’s brother-in-law and Hyundai Motor Group Chairman Chung Mong-koo in an acquisition of Hyundai E&C. The construction company, which was formerly part of Hyundai Group, ended up in the automotive group.
Relations between Schindler and Hyundai Group really soured in 2011. Hyundai Elevator signed a contract with five financial companies that guaranteed annual profits of 5.4 percent to 7.5 percent on shares they purchased in HMM. The stock that the financial companies purchased was to be used to defend HMM in case of a hostile takeover attempt.
HMM’s stock plummeted, and Hyundai Elevator had to pay the financial companies the promised profits. Schindler filed a lawsuit demanding 718 billion won ($616 million) in compensation for its own losses caused by the Korean elevator company’s payments to the financial companies.
Since 2011, Hyundai Elevator has made five paid-in capital increases as well as an issuance of convertible bonds, which Schindler claimed were ways to shore up HMM. More lawsuits were filed, but most were dropped, with the exception of the 718 billion won compensation case.
But since HMM started suffering from new financial hardships this year, the Swiss company apparently sent out an SOS to its government.
Regarding the support, Hyundai Group said there is no legal problem with Hyundai Elevator giving financial support to HMM. “We have already reported this to the FSC,” a Hyundai spokesman said. But local civic groups, including Solidarity for Economic Reform, recently requested the FSC and Fair Trade Commission determine whether the support is fair.
BY KWON SANG-SOO, PARK JIN-SEOK [firstname.lastname@example.org]