Lone Star, pissed off over ongoing investigations into the company’s dealings, is terminating its deal to take over Korea Exchange Bank.
Clearly, the bank is guilt—look at that photo of chairman John Grayken. Mischievous… very mischievous.
Anyway, the Korea Times has a ton of stuff on the Lone Star decision. Some of the highlights are:
- Former AMCHAM boss Jeffery Jones telling Koreans—in Korean—that their country “shows the highest anti-corporate sentiment in Asia and is openly critical of foreign investors” (see Korean story via Dong-A Ilbo here);
- The prosecutor handling the Lone Star said he might file a suit against the Financial Times (go figure) for suggesting that the case against the foreign fund is an anti-foreign investor witch-hunt. In particular, they’re a bit pissed at this Anna Fifield piece from Nov. 21 (which I haven’t read, sorry). The prosecutor also warned foreign media “not to portray the Korean prosecution as seeking to fan nationalism and anti-foreign capital.” Or else.
This should prove interesting…
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The bigger issue is whether prosecutors will continue to allow themselves to be guided by public sentiment. This is not just an anti-foreign problem, but a problem of the legal system in general.
the Lone Star dude speaks the truth. No doubt the daily KBS 9pm news is still a great propaganda machine in South Korea.
Here’s two good articles, IMO, on Korea’s attitude(s) toward foreign investment:
http://www.iie.com/publication.....archID=534
http://www.iie.com/publication.....nd0905.pdf
This explains some things (from Noland):
“Consider some survey evidence on chauvinism. In 2002, pollsters from the Pew Survey on Global Attitudes interviewed more than 40,000 people in 46 countries around the world on a variety of issues. One of the questions they asked was whether respondents agreed with the statement that “our people are not perfect, but our culture is superior to others.” The results make for interesting reading. Consider the case of France, a country with a reputation for cultural chauvinism: When asked this question, 40 percent of French people mostly or strongly agreed with the sentiments of the statement. In Russia and the United States, two countries known for strong nationalism, 60 percent responded affirmatively. In Japan, the share was even higher, 75 percent. In Korea it was a whopping 90 percent, the highest score of any country in the sample, half again as high as in the United States. Paradoxically, while an astonishing share of Koreans apparently feel culturally superior to the rest of the world, they also apparently lack confidence in that culture’s resilience—five out of six Koreans think that it should be protected from foreign influence.”
Well, micheal, Koreans are more open to this sort of ethnic nationalism because of colonial Japan’s policies in Korea that sought to erase the Korean identity. This might explain why the most influential South Korean nationalist authors were literally fascists in the 30’s and 40’s.
This kind of ethnic nationalism was on the rise before Japan colonized Korea, in part to avoid being colonized by reframing Korea as a nation rather than a kingdom. You’re right I think about some of its fascist roots. It seems like its led Koreans to see business as a sort of zero-sum game.
Actually, it is the ethnic nationalists in their 30s and 40s that trouble me the most here too. Except these days they like to call themselves “progressives.”
But, as michael pointed out, there does appear to be a severe lack of confidence that accompanies – or underlies – these notions of superiority. Kind of an “insecurity” complex, rather than a clear superiority or inferiority one.
And, as for the prosecutors, I have an abundance of confidence in them continuing to allow public opinion to guide their actions. However, this is also an issue elsewhere, especially in countries where prosecutors – district attorneys – are elected officials.
Brendon, correct me if I’m wrong but the prosecutor’s office controlled by the prosecutor general — who is like the attorney general in the U.S. The prosecutor general is then a political appointee, installed by the president. It is my understanding that prosecutors are controlled by this fellow as well.
In any case, I think the results of the poll you’ve quoted has something to do with the fact that Koreans having been conditioned to publicly agree with such statements than an actual expression of what they truly believe–nobody wants to stick out when there’s a huge hammer hanging above your head. Besides, I can’t imagine that anyone who has had the misfortune of watching Korean TV shows aimed at the 15 to 25 demographic would agree with the question.
Look forward to Mr. Carr’s info on that, R.Elgin. Would be curious to know how much a prosecutor general’s control impacts on prosecutors’ decision making, especially with regard to high profile cases.
Wonder if the Korean prosecutors will summon the publisher of Financial Times and/or other foreign media outlets, whom they view as being “disrepectful” to the prosecutors?
I am going from memory here, but I think that prosecutors have some measure of independence from the executive. I recall that the Roh administration has had run-ins with prosecutors in the past.
Hopefully, Mr. Carr will pop his head up and clarify things.
Someguy, I was surprised the Koreans answering the poll didn’t automatically reject the “our people are not perfect” part
Seriously though, I think the chaebol have created a distorted business environment and most people including the gov’t officials that keep asking for foreign investment can’t handle the notion of foreign management coming in and changing things.
Hokay, here it is as I understand it. I’m not perfect — believe it or not! — and don’t know everything yet. But this is what I know of the organization of the prosecution:
Korea has a bifurcated justice structure. In the US, the Attorney General is the head of the Department of Justice. In Korea, the Minister of Justice is not the same as the Prosecutor General. Both are appointed by the President, but whereas the Minister of Justice is straight-up a political appointee, the Prosecutor General is (usually) a career prosecutor whose candidacy is put forward by the prosecution as an institution. He is independent of the Minister of Justice, although the Minister of Justice has the constitutional power to direct the Prosecutor General to take or not to take some action.
Historically the prosecution has been a lapdog of the presidency and done whatever those in power commanded, but historically Korea has been ruled by thugs. Democratic Korea has only a 15 year history. Over the democratic era, the prosecution has increasingly asserted its independence.
The Roh Blue House made a lot of high-minded declamations earlier in his presidency about respecting the independence of the prosecution, and not interfering in the administration of justice for political purposes. And for a while, it seemed they held to principle. But then in 2005, during the flap about arresting Commie professor Kang Jeong-Koo for violation of the National Security Act, the prosecution complained about pressure from the Blue House which ultimately resulted in the Justice Minister’s order not to arrest.
Since then, it seems the 386ers have had their thumbs all over the prosecution. Whether that has led to this Lone Star investigation or not remains to be seen. Is there an anti-foreign witch hunt in progress? Maybe, maybe not — but the surest way to make sure it’s perceived as such is to try to muzzle the foreign press.
The last muzzling action against the foreign press, to my recollection, was against Steve Glain at the Wall Street Journal because in 1995 or 1996 he had the temerity to suggest the Korean government officials routinely take bribes — this was at the same time I edited a Korean law professor’s article on the very same topic for the Pacific Rim Law & Policy Journal at the University of Washington Law School. Although the prosecution determined not to indict him for criminal defamation (no doubt after some hard “investigation” at the prosecutors’ office), Steve was eventually hounded out of Korea. Anna Fifield’s a repeat offender: She also published the “schizophrenic” description of government policy on foreign investment. I hope the FT keeps its spine up, or that Anna’s ready for her next assignment with the Financial Times. She’s a lovely woman in addition to being smart.
The Korean attitude toward foreign investment can pretty much be summarised as follows:
“Give us your money. Thanks. Now f*ck off.”
Here we go again. “You can’t say that because it’s wrong, you just can’t say it because we don’t like it.”
The first rule of getting out of holes is to stop digging. These prosecutors apparently don’t know the first rule.
Red Sparrow: Nice summation. I might amend it thusly: “Give us your money, technology and managerial know-how. Don’t make a profit. Thanks. Now foxtrot oscar.”
Brendon, based upon what I read, I perceive a pattern of selective action against mostly American business concerns, though I am sure other countries could easily be targeted as well. I am sure I am not the only one suspect this is more than a casual concurrence of events.
I, too, am sure you’re not the only one with this suspicion. Again, whether or not the suspicion is merited may be irrelevant. If the so-called “foreign investment community” perceives something to be true, action is necessary to address the “misunderstanding” (as Koreans so often like to term being caught out). Now, I could be wrong, but it’s my belief that threatening lawsuits against the foreign press is probably not the best way to win over that community — as its key members all subscribe to the idea that the press ought to be free to report without fear of reprisal.
South Koreans have been in the process of buying back companies they had “lost” immediately following the 1997 financial crisis. While South Koreans may still complain that foreigners had bought “our” companies for a cheap price, I’ve heard complaints from (now-eternally former) foreign investors that South Koreans on both sides of the deal (South Koreans on the foreign AND domestic side) are collaborating on the sidelines without knowledge of the foreigners to make the price as low as possible for South Korean buyers.
Certainly something journalists in Seoul should look into….
Don’t know if the business community cares much about threatened lawsuits against the press when it’s making money. FEER and others ran afoul of Singapore’s Lee Kwan Yew, yet money was being made and FDI continued. For a rather boring place w/ some speech restrictions it certainly is a more dynamic place for your expat businessman than here. But zero-sum gamers don’t run the show there.
Don’t forget the reports of government pressure against the ones in charge investigating the 386 spies.
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