#96 The Kim Hak-kwon Administration's Choice Before the foreign exchange crisis arrived, I began to improve our structure by gradually withdrawing funds from the Myeon District's Private Loan Market, which had been run by rule of thumb.
All uncollectible debts, such as bad debts, were handed over to Viper No Ik-seon, while all recoverable funds were taken over by Kim Ho-sik, who collected the money. At the same time, I established Myeong-dong Capital as a holding company and created three corporations under it.
With the Money Lending Business Act not yet established, there was no need to lend money at low interest rates. We slowly established ourselves by lending at high interest rates, focusing on people with collateral.
“Hyeon-seong, how's the work?”
“Director Kim is handling most of it, so there are no major problems.”
Sensing my gaze, Kim Ho-sik slowly opened his mouth.
“I've entrusted one business each to trustworthy loan sharks who used to work under me. I've taught them that the era of doing business like gangsters is over, so things like that won't happen again.”
“Making money isn't the most important thing. People with cash will flock to Myeon District, like in the Warring States period. Companies that lend money will pop up not just in Myeon District, but in Seoul, no, all over the country.”
Hyeon-seong and Kim Ho-sik nodded.
“Securing the market first is the priority. Compete with lower interest rates than any other company. We will never be outmatched in terms of capital.”
Kim Ho-sik, who once held a significant position in the Myeon District's Private Loan Market, had given up everything to take on a practical role as a director at Myeong-dong Capital, working under Hyeon-seong.
“Whatever happens, make sure you report it to Hyeon-seong. You don't have to report to me, but there should be absolutely nothing that Hyeon-seong doesn't know about.”
“Yes, Boss.”
“How does it feel to come into the light?”
Kim Ho-sik smiled faintly.
“I can now be a father who isn't ashamed in front of his daughter. Thank you, Boss.”
“Once this war is over, there will be no more rough business. From now on, don't move around alone. Move with Park Dong-soo's forces.”
“Yes, Boss.”
Kim Ho-sik's face had also softened considerably. The venom that had built up from enduring the life of a loan shark in Myeon District with pure grit and malice seemed to have lessened.
“You look much better. I hope you will now live as Director Kim Ho-sik of Myeong-dong Capital, not Twin Blades Kim Ho-sik. Make sure you never return to the shadows.”
I sent Kim Ho-sik, who was nodding, out of the room. Sitting in the boss's office of Myeong-dong Capital, Hyeon-seong now looked quite the part.
“Once this is over for good, go find something you really want to do.”
“I'm satisfied with how things are now.”
“Your body? Are you okay?”
“Yeah.”
Seeing the worry in my eyes, Hyeon-seong chuckled and said nonchalantly.
“Don't worry about me. While learning this business, I've come to understand why you were so ruthless.”
“Really?”
“I didn't know before, but money is a truly frightening thing. Hearing the old stories from the Director...”
Hyeon-seong shook his head as if he didn't even want to think about it.
“This isn't something that will end quickly, so if any problems come up, contact me anytime. Don't try to solve it on your own.”
“Got it.”
“Let's go get something to eat. It's been a while since we ate together.”
That day, I also visited No Ik-seon's nearby office. No Ik-seon's subordinate, who was guarding the front of the office, saw me and bowed. No Ik-seon came down in a bit of a hurry, as if he had been contacted.
“Boss, you should have at least called. If I had known you were coming, I would have been out here waiting.”
“It's alright. Boss No, it's been a long time.”
“Let's go inside first.”
When I entered the office, various documents were scattered about. No Ik-seon said awkwardly.
“I didn't know you were coming, so I didn't tidy up. I'll clean it up now.”
“No, it's fine. I won't be staying long, let's just sit wherever.”
As I sat in the seat of honor on the sofa in the middle of the office, Boss No followed and sat down. After Cheon Su-man's removal, he was clearly being careful about his actions in front of me.
“It must be tough, isn't it?”
“What? No, not at all.”
“You must be busy since all the bad debts were passed on to you, but once you've finished cleaning them all up, move your office to Gangnam.”
No Ik-seon's eyes widened.
“Did you say Gangnam?”
“Yes. From now on, money lending companies will lead most of the private loans targeting ordinary people, starting with Myeon District.”
I added, seeing No Ik-seon's slight confusion.
“Target people starting venture businesses around Gangnam and the rich in Gangnam who need large sums of money quickly. Even with compound interest, advance interest, and a high base rate, there will be plenty of people willing to borrow.”
The venture boom that started in America had begun in Korea as well. But with no proper venture capitalists yet, they would have to borrow urgent money from loan sharks. In just a few years, individual loan sharks pushed out by money lending companies would flock to Gangnam.
It was still before loan sharks had properly established themselves. We had to be the first to plant our flag in the ownerless land of Gangnam.
“That side of the business won't be affected whether the Money Lending Business Act is passed or interest limits are reinstated. It's not a market that abides by the law. There will be many people looking to borrow urgent money for the very short term.”
Real estate moguls trying to pay taxes. Or venture companies that need to pay their employees' salaries. They have no choice but to seek out loan sharks.
“I understand.”
No Ik-seon nodded obediently. Without dragging it on, I stood up from my seat and asked.
“Is the debt collection going well?”
“The recovery rate isn't as good as I thought. With the economy as it is, many people are just telling us to do our worst.”
“It can't be helped. Don't push yourself too hard.”
That's how bad debts were. The recovery rate was often less than 10%. Even among loan sharks, if they felt a debt was 'absolutely unrecoverable,' they would sell it for a pittance to collectors who specialized in such things.
Collecting these kinds of debts was No Ik-seon's specialty, so I had no choice but to trust and entrust it to him.
“I trust you, Boss No.” “Don't worry, Boss.”
“A message from Kobe.”
“Yes.”
Lee Yong-hyun, who was always arrogant in front of others, was bowing his head to a Japanese man.
“He said to make sure we take over Korea's money lending business this time without fail. With the Interest Limitation Act gone, it's not just us, but also mayflies jumping in, which is causing a lot of trouble.”
The Japanese man was much younger than Lee Yong-hyun. But there was no hint of respect in his eyes as he looked at him.
“Yes, what should I do?”
“We will make our own efforts, but create a Money Lending Business Act as quickly as possible, just like in Japan. It's better to have an interest limit. However, maintain a high interest rate of around 48%. Once all the competitors are eliminated, you can repeal the law then.”
Lee Yong-hyun nodded politely.
“I received the message from Kobe. But I didn't expect the Young Master to come in person.”
“I hope you understand how serious we are about this matter. The government is also in a position where it has no choice but to pressure us. It's difficult to expand our business on the mainland right now...”
“Yes, I understand, Mr. Watanabe.”
Watanabe Saoru, the biological son of the head of the Yamaguchi-gumi. That was the name of the man standing before Lee Yong-hyun.
“This is a matter where we can once again receive the help of the great Japanese Empire. You will have to mobilize all your capabilities. Do you understand?”
“Yes, I understand.”
Watanabe Saoru's eyes gleamed.
“You still haven't dealt with the old man who interfered with our business at every turn... Did we expect too much from you, Rinoie?”
There was no change in the pitch of his voice, but Rinoie, Lee Yong-hyun, felt the edge of a blade in Watanabe's tone. A cold sweat seemed to run down his back.
“I apologize. There were many difficulties in dealing with him immediately, so I prepared for a long time...”
“But you ruined everything you prepared.”
“......I have nothing to say.”
As Watanabe showed his displeasure, Lee Yong-hyun bowed his head low.
“Have you prepared anything else?”
“It will be difficult to make a move right now.”
“Then leave it. We'll take care of that matter ourselves. For now, you just focus on legislation and make sure there are no inconveniences for us to establish ourselves in Joseon. That's all you need to do.”
“I understand.”
As Watanabe stood up as if he had finished speaking, Lee Yong-hyun also rose and bowed his head.
“Keep in mind that if you repeat the same mistake, the bond that has been passed down from our predecessors may be severed. Do you understand, Mr. Rinoie?”
“Yes.”
With those final words, Watanabe left Lee Yong-hyun's house. Lee Yong-hyun, who had escorted him out of the house, returned to his room and fell into thought while stroking a cherished piece of pottery.
‘I missed the presidential election, and I failed to handle the Myeon District affair properly. Well, I have no excuse.’
In Lee Yong-hyun's mind, there was no future for the Republic of Korea. There was only the thought of gaining Japan's recognition to seize and wield the power they offered.
A new administration had taken office, but the Jungwoo Group's accounting fraud scandal broke out, and all attention was focused there. Starting with Eva's Mirae Investment, even massive American private equity funds declared a hostile M&A against Jungwoo Group. Unlike in the original history, the stocks of Jungwoo Group's affiliates had dried up in the stock market.
On Kim Mu-hyeok's orders, Eva, having already secured a large number of shares, requested an emergency shareholder meeting for all affiliates starting with Jungwoo Corporation, but the Jungwoo Group was stalling for time.
High-ranking officials from the Ministry of Finance, who had been lobbied by Eva, were continuously submitting reports to the president arguing that the Jungwoo Group had to be abandoned to save the Korean economy.
Meanwhile, in the presidential office at the Blue House, Kim Hak-kwon was in an emergency meeting with his chief of staff and three close associates who had been his long-time political partners.
“We'll have to abandon Chairman Park. Does anyone have another way?”
“Mr. President, Chairman Park has never been on bad terms with us. He was the one who stepped forward more than anyone during the gold-collecting campaign, promising to help the government without seeking profit...”
Assemblyman Kwon Seong-jin, the floor leader of the Progressive Party, defended Chairman Park Dae-ho of the Jungwoo Group, but the others' reactions were cold.
“Still, there's no other way. Pressure is already coming from America, and isn't the IMF delaying the money it was supposed to give us? Are you saying we should kill the entire nation to save Chairman Park Dae-ho?”
Kwon Seong-jin couldn't say more after hearing the words of Kim Mu-saeng, who had returned to private life upon Kim Hak-kwon's inauguration, saying he couldn't be a burden to the president. Various opinions were voiced, but in the end, they concluded that they had to abandon Chairman Park Dae-ho. Chief of Staff Park Won-seop's words were the final blow.
“We haven't even reviewed all the accounting ledgers yet, but the amount of accounting fraud is enormous. It's already exceeded 25 trillion won. There's simply no way to save it. If this comes to light, all the private equity funds that have expressed interest in an acquisition might pull out.”
Everyone in the meeting, including President Kim Hak-kwon, fell silent and groaned.
“The companies these private equity funds want to acquire are all blue-chip companies. But if they are torn apart and scattered, it will have a negative impact on our country's economy. They are hyenas who only see money.”
Park Won-seop said resentfully.
“Mirae Investment has expressed its intention to acquire the entire Jungwoo Group, but we don't know how things will change after the acquisition. In particular, the lobbying power of its representative, Eva Ju, is considerable. There are even suspicions that she has recruited personnel from the Ministry of Finance, appointed them as outside directors, and is using them to influence the ministry.”
The Director of the National Intelligence Service, Lee Chan-jong, who had been listening, added.
“It's not a suspicion. You can assume that the majority of the Ministry of Finance and Economy has been influenced, whether in a big or small way, by Mirae Investment's lobbying. The influence of high-ranking officials, both former and current, is substantial.”
“Then what are we supposed to do? Everyone, stop saying frustrating things and suggest a solution.”
Kim Hak-kwon raised his voice in frustration. No one could offer a clear answer. In the end, Chief of Staff Park Won-seop spoke up.
“Let's ask Boss Han Gyeong-yeong for help. He's more friendly toward us than other foreign investors, so it would be best to explain the government's position and ask him to acquire the entire Jungwoo Group.”
President Kim Hak-kwon already knew that was the only way.
“He may be friendly, but isn't he also backed by foreign capital, just like the others? Manager Park, do you trust him?”
“Among domestic capitalists, there are no conglomerates with the financial power to swallow the entire Jungwoo Group. We have no choice but to borrow the power of foreign capital.”
“Hah... It's been rough since the beginning of my term. For now, contact Boss Han and tell him to come in.”
“Yes, Mr. President.”
“Ah, tell the man named Kim Mu-hyeok to come in as well. That Han Gyeong-yeong fellow said he would consult that young man's opinion on matters in Korea.”
Just as Kim Mu-hyeok had predicted, the Blue House had no choice. They couldn't give up on the other large corporations that were holding on just to save the Jungwoo Group, a company for which they didn't know how much public funds would need to be injected.
“Yes. Yes, I understand.”
After hanging up the call from the Blue House, Han Gyeong-yeong looked at me with surprised eyes.
“Mu-hyeok, things are moving just as you predicted. They asked if we could come in tomorrow.”
I smiled and nodded.
“Their options were bound to be limited. After all, most of the Jungwoo Group's debt is short-term foreign debt.”
Just then, my phone rang.
“Hello.”
“This is the Blue House's secretarial office. Is this Mr. Kim Mu-hyeok?”
“Yes, it is.”
“The president wishes to meet with you tomorrow. Could you please come to the Blue House at 2 PM?”
“I understand.”
The Blue House must be in a real hurry.
< The Kim Hak-kwon Administration's Choice > End