South Korea’s government and business are over-close

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Aside from the drain on the public purse, the affair is a reminder that the original merger between two units of Samsung cut the value of the South Korea’s pension fund by $300m, by some estimates

On June 20th the World Bank’s arbitration forum ruled that South Korea’s government had left Elliott Investment Management, an American hedge fund, out of pocket by improperly meddling in a merger between two units of Samsung. The deal in 2015 between Samsungand Cheil Industries was seen as an attempt to ensure a smooth succession between Mr Lee and his son, Lee Jae-yong.

Yet in 2016 Moon Hyung-pyo, the health minister at the time of the merger and by then the head of the, was indicted for pressing the pension service to approve the deal. This triggered a series of investigations into corrupt dealings between Samsung and the government which revealed that the younger Mr Lee had bribed the then president, Park Geun-hye, to aid his succession. Ms Park was impeached; both ended up in jail .

Instead of quietly paying up, on June 27th the Ministry of Justice petitioned the court to deduct from the amount it owed a sum previously paid to Elliott from Samsung related to the merger. Continuing to make life hard for a foreign investor seems at odds with the spirit of the country’s capital-market reforms, which are designed to attract investors and end the “Korean discount” that plagues its companies.

The entire affair may also upset ordinary South Koreans. Aside from the drain on the public purse from the court case, it is a reminder that the original merger cut the value of the country’s pension fund by $300m, by some estimates. Park Sang-in of Seoul National University says the drama highlights how the “relationship between the government and the

 

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