Coordination is missing

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Coordination is missing

The Justice Ministry released the notice of intent it had received from U.S. activist hedge fund Elliott Management that alerted the Korean government of its plan to file an arbitration under the investor-state dispute clause of its bilateral free trade pact with the United States.

Under the letter, which must be made public in accordance with the FTA rule, the U.S. hedge fund claimed damages for the government’s meddling in the merger between Samsung C&T and Cheil Industries in 2015. It stated that the fund, which held more than 7 percent of Samsung C&T, suffered losses because the administration under former President Park Geun-hye influenced the National Pension Fund to vote in favor of the merger and filed for damages worth $670 million.

The same fund also vowed to vote down Hyundai Motor Group’s restructuring plans on the same grounds, as it had opposed the merger between Samsung C&T and Cheil Industries. It highlighted the resemblances between Hyundai and Samsung’s reorganization plan to sway foreign shareholders ahead of the vote later this month.

The American hedge fund has capitalized on the fallout between the government and large chaebol. It would be naïve, however, to just criticize the fund. Elliott is suing the government over the 2015 case because the Korean prosecutors and court found Park and Samsung guilty of bribery. The court found Park and the former health and welfare minister, as well as NPS executives, guilty of irregularities in approving the merger. The new government may have to pay a heavy price for publicly going after the misdeeds of the former administration.

A commission of the Health and Welfare Ministry examining its past wrongdoings labeled the NPS’ approval of the 2015 Samsung merger one of its biggest follies. The government was more or less inviting suits by shareholders by drawing conclusions ahead of the Supreme Court’s decision on the NPS’ approval.

The Health Ministry is trying to clean its name while the Justice Ministry fights a court battle with Elliott. The Blue House must coordinate among government offices to ensure consistency in policy instead of meddling and giving out orders individually to agencies.

JoongAng Ilbo, May 12, Page 34

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