Korea Development Bank, Yeongdeungpo-gu, Seoul.
Executive Director Choe Jong-su, who oversaw all business within the bank, quietly looked me over and asked,
“So... the point is that you want us to sell our stake in KEPCO?”
“That’s correct.”
He let out a derisive chuckle, as if dumbfounded.
“Well, that’s strange. I doubt the pension fund, the largest pool of capital in the country, is unaware of KEPCO’s governance structure. Where on earth did this decision come from?”
“I’m only here to relay what was decided above.”
“In that case, go back and make sure you tell your superiors this: we won’t sell so much as ten won’s worth of our stake.”
He rose from his seat as if the matter was not even worth discussing.
It was exactly the reaction I had expected. Korea Electric Power Corporation was the nation’s only electricity supplier, with the government and Korea Development Bank holding a combined 51 percent stake.
KEPCO in particular was protected by layer upon layer of safeguards preventing foreign capital from owning more than a certain amount of shares, and there was one reason for that.
If management control passed into other hands, they would have to sell electricity at its proper price.
“Executive Director... please don’t be like that. Take one more look at the paper.”
“What do you mean, look at it? Do you people think the government and KDB have been defending a 51 percent stake in KEPCO because we’re pushovers?”
“...”
“We know perfectly well what kind of reforms KEPCO needs. But if electricity rates go up, who’s going to look after the people’s livelihoods? And if management control ever passes to foreign capital, who the hell is going to deal with the aftermath?”
I felt discouraged, but at the same time, relieved.
So these bastards do know. That KEPCO’s debt is absurd right now.
“Executive Director, are we strangers?”
Since Korea Development Bank would soon have to move to Busan, I approached him with a Busan-style way of talking.
“The party that has bought the most KEPCO bonds up to now is our pension fund. The party with the largest KEPCO stake after KDB is also our pension fund. If you think about it, we’re a friendlier shareholder than anyone, so why are you treating us like a foreign company?”
“No, well, that’s...”
“And when have we ever used our stake as leverage to interfere in corporate management? There are truckloads of companies that went under because we didn’t interfere in management. That’s how thoroughly our pension fund has upheld the principle of separating investment and management.”
Executive Director Choe scratched his head roughly and sighed.
His thoughts had to be complicated. KEPCO was a white elephant for Korea Development Bank too.
Keeping alive, like a zombie, a company that should already have gone bankrupt meant enormous amounts of public money had to be poured into it. The fact that KEPCO’s share price was lower than it had been ten years ago meant KDB had taken a massive loss as well, and the more it lost here, the less it could help other companies.
“Executive Director, I think of it this way. Isn’t Korea Development Bank, as the name suggests, a policy bank specially established by the government to encourage the nation’s various ‘industries’?”
“...”
“But in reality, most of its money is spent plugging deficits at public corporations, so it can’t even dream of carrying out its true duty of promoting industry.”
“What are you trying to say?”
“We want to share that burden with you. Sell us your KEPCO stake, and use the money you secure that way to support a wider variety of businesses.”
As I recited something straight out of a textbook, he looked at me with a rather serious expression.
“You talk like some multilevel-marketing swindler. Fine. But what are you planning to do after buying our stake?”
“Does an investor need some special reason to buy stock? We’ll try to boost the share price.”
“Boost... KEPCO’s share price?”
“Yes. At present, our pension fund internally evaluates KEPCO’s growth potential as boundless. In line with the global community’s carbon-reduction goals, the renewable energy business will only become more important.”
“...Then doesn’t that mean it has no potential, not a lot? KEPCO’s renewable energy ratio doesn’t even reach the OECD average.”
“We intend to change that.”
I held out the documents again.
“Our pension fund will make a total investment of twenty trillion won not only in KEPCO, but in domestic public energy companies as a whole. Through recent negotiations with China, we’ve agreed to import a large quantity of Chinese renewable-energy components... Of course, we can’t avoid using those components right away, but how long can we keep relying on them? In the long term, we need independence in parts.”
“Hmm...”
“I am certain. Just as we developed our own self-propelled artillery with independent technology, KEPCO will also acquire independent technological capabilities. Therefore, we want to make a large-scale investment in KEPCO and earn the returns that follow.”
In truth, it was a lie. That kind of world would not come.
If my memory was correct, every time KEPCO turned a profit, the government froze electricity rates, and KEPCO’s operating profit always plummeted as if possessed. I remembered that the current administration had also used the people’s livelihoods as an excuse and not raised electricity rates even once throughout its entire five-year term.
With the company’s operating profit constantly being swallowed up just to cover deficits like this, investment in the future was out of the question.
As if that weren’t bad enough, the deadline for carbon reduction promised by the global community drew closer, and KEPCO hurriedly increased renewable energy... but because it had made no investments in the future, it ended up buying only Chinese components, just as it did now.
And whenever China’s mood soured, it threw its weight around with those components, just like it did with the Korean cultural ban, and our energy security was constantly threatened as a result.
“Investment... investment.”
Had my twenty-trillion-won proposal appealed to him?
Unlike at first, Executive Director Choe asked me with his guard considerably lowered.
“Executive Director, please.”
“All right, all right. If you have such grand ambitions, then I can’t very well refuse to consider it.”
“Thank you for your words.”
“Besides, it’s not as if the pension fund would become a hostile shareholder to us. When you think about it, you and we are both running businesses with the same tax money. It seems I was too wary.”
“You are absolutely right. Are we strangers?”
After thinking for a moment, he asked me,
“Then how much would you need?”
“At present, we hold ten percent, the legal maximum acquisition limit. If possible, we want to double that.”
“So you want to buy another ten percent?”
“Yes. We would like Korea Development Bank to sell us just that much.”
The government of the Republic of Korea had protected its stake in KEPCO as if it were practically a national security business.
It was so serious about protecting public corporations that it imposed restrictions such as prohibiting foreign capital from holding more than 3 percent as a single entity, prohibiting domestic capital from holding more than 10 percent, and requiring Financial Services Commission approval to hold more than 3 percent.
Why had bastards that serious sat by and watched KEPCO’s debt reach two hundred trillion won?
“Then I just need to persuade the Financial Services Commission and the various government ministries on that point?”
“Yes. That’s correct.”
“Mm... Well, it won’t be easy, but I’ll give it a try.”
“Thank you, Executive Director!”
“But I’m not saying I’ll do it for nothing. You must keep the twenty-trillion-won investment promise you just made, understood?”
“Yes. All financing going forward, including KEPCO bonds and paid-in capital increases, will be handled by the pension fund. Not only for KEPCO, but for all public energy companies. But Executive Director... how long will it take?”
Executive Director Choe looked at the calendar, then glanced at his watch.
Then he spread all five fingers wide and showed them to me.
I felt a faint sense of despair.
“...Five months?”
“No, no.”
“What? Surely not five years?”
“What do you take me for? Wait five minutes.”
With that, he picked up the internal phone.
“Yeah. It’s me. Gather all our executives in the conference room. It’s an urgent agenda item.”
*
The division heads gathered in one place looked at one another with tense faces.
Recently, the chairman’s seat at Korea Development Bank had been vacant, and Executive Director Choe had been handling all major decisions within the bank. Since a man like that had suddenly called an emergency meeting without warning, there was no way they would not be tense.
-What’s going on...? Don’t tell me the chairman’s seat has been decided?
-How much of a parachute appointment is it this time that they called an emergency meeting...
-Come on. They wouldn’t call an emergency meeting over just that. The way I see it, we’re gathered today because of that Busan relocation issue.
-Damn it. I need to hold out in Seoul until I retire.
Amid all those rampant guesses.
Executive Director Choe came in with a bright expression, carrying a thick stack of documents.
“Oh, is everyone here?”
-Yes.
“No need to be so tense. I called you all here today to deliver good news.”
Good... news?
“Division Head Kim. How much of a stake does Korea Development Bank currently hold in KEPCO?”
-If you mean our KEPCO stake, it’s about 33 percent...
“That is quite a lot. How are the returns on that at present?”
-...Far from returns, we’re still in the red. Of course, it has recently recorded profits for eight consecutive quarters, but considering the losses we’ve taken up to now, it’s still in deficit.
The division heads all reacted as if they could not understand.
He said he was delivering good news, so why was he bringing up KEPCO, KDB’s problem child?
“I see. Then let’s sell just ten percent of it.”
-Yes? What?
“The pension fund has sent word that it intends to buy. Ten percent of KEPCO. They want it as a block deal.”
-E-Executive Director, that’s impossible...
“I know. Because KEPCO is currently classified as our associate company, we can’t sell under the equity method. So I’m saying let’s revise our internal regulations a little.”
-That isn’t simply a matter of our internal regulations. In reality, those regulations were made by the government...
“Which is why, naturally, we’ll have to persuade the government agencies too.”
-T-That makes no sense.
“Why doesn’t it make sense? The equity method isn’t the Constitution. It can be amended at any time according to domestic factors, can’t it?”
-...
“And it’s not as if we’re selling it to some outsider. We’re selling it to the pension fund, which is practically a government-friendly shareholder. Is there a problem with that?”
All the executives shut their mouths.
Of course there was a problem. But none of them particularly wanted to persuade Executive Director Choe otherwise.
KEPCO’s deficit problem had always been a headache for KDB, and every time those bastards recorded a loss, KDB’s financial soundness deteriorated too.
Their deficits had not merely squandered opportunity costs; they had genuinely ruined KDB’s financial statements as well.
-Then... why does the pension fund say it wants to buy?
“They say they want to invest. They think Korea’s energy market has a very bright outlook.”
-Yes? What?
“Well, if I explain at length, there’ll be no end to it. From what I heard, they seem likely to make a fairly large-scale investment. They looked quite sincere about this matter. What do you all think?”
The executives’ faces twitched.
The government may have created layer upon layer of safeguards to defend the management control of public corporations, but that did not mean this was some domain that could never be revised, like the Constitution. If the executives in this room did their jobs, it could be handled within a month.
And it was not some random outsider, but the pension fund, which was practically family, wasn’t it?
“And another thing. Since we’re on the subject. I understand that lately, because of this Busan relocation issue and whatnot, there’s considerable dissatisfaction not only from our union, but from other executives and employees as well. Isn’t that right?”
-...!
“So, I was thinking. Since we’ll be selling the KEPCO stake anyway, we can use that money to invest in businesses with better prospects. Then, with the money we earn that way, how about giving our executives and employees even a small consolation payment? What do you think?”
As everyone gauged one another’s reactions, the head of the HR Planning and Management Division shot his hand into the air.
-Executive Director... in that case, we must do it. We absolutely must sell!
Then the Finance Division raised its hand.
-I think it’s a good idea as well. If the executives here make an effort, it’s entirely possible within a month!