The general shareholders’ meeting, originally scheduled to last two hours, finally wrapped up after roughly eight, thanks to the professional meeting-goers’ dazzling eloquence and performances. But even when it ended, it had not truly ended. The most important agenda item—the vertical spin-off—had been postponed until tomorrow.
It was a sight rarely seen at an ordinary shareholders’ meeting, but because a pension fund representative had personally attended, the meeting ended unfinished.
Now all the shareholders’ attention was fixed on the pension fund representative. Would the pension fund, which held a 10% stake, protect shareholders’ rights—or help the chaebol save on inheritance tax?
“I apologize for showing you such an embarrassing scene. If you had contacted us in advance, we would have prepared a proper seat for you...”
Nam Sanggi spoke to the pension fund representative in a voice that had gone utterly meek.
He was a strange one. He looked about thirty, yet they said he was a senior portfolio manager at the pension fund. Was such a thing even possible at a pension fund, where seniority was stricter than anywhere else in the financial world?
No, that wasn’t the important issue right now. The pension fund, which had always treated involvement in management as taboo, had attended out of nowhere. With the Commercial Act amendment causing such an uproar these days... why did they have to show up on the very day of the shareholders’ meeting for the vertical spin-off?
“Would things have been different if I had contacted you in advance?”
“...Pardon?”
“The shareholders’ sentiment was quite harsh. I think I would have been angry too, if I were an investor. The outlook for defense is already bleak and the stock price is scraping the floor, and now a vertical spin-off? How could they not be angry?”
“Manager Lee, that is not—”
“As a major shareholder, this is a rather disappointing matter as well. Frankly speaking, people buy KD Group shares because they believe in the defense business. Who buys them for the other businesses?”
“You misunderstand. This vertical spin-off is due to the development of independent K-9 technology and export issues—”
“If the K-9 starts selling like hotcakes, will you spin that off too?”
“...”
“And if that gets a good response, will you next list the K-9 separately by each component?”
Even from a short exchange, Nam Sanggi could tell. This young man was not pleased with the vertical spin-off.
“N-no. That will never happen. This listing is truly something we had no choice but to carry out in order to secure specialization. More than anything else, please look at our technological achievements! We truly poured our hearts and souls into successfully localizing the self-propelled howitzer!”
Annoying as it was, that was also true.
Korea’s independent self-propelled howitzer technology was, in a word, revolutionary. Compared to the Paladin and AS90, the main armored assets of the U.S. and Britain, its specifications were overwhelming. Its performance was roughly on par with Germany’s PzH, but its price was half. Thanks to that, they were receiving production orders from several countries, including Turkey, India, and Poland.
“I’ll say it again: this is the beginning, not the end. Starting with self-propelled howitzers, our research team is preparing another innovation in air power. Soon, an aviation force with specifications similar to the Apache will be responsible for our air defense network! And for that, we need specialized personnel, time, and enormous development costs. Please understand that today’s vertical spin-off is truly for those reasons.”
A country that, unable to make nuclear weapons, possessed guns and shells on a scale comparable to nukes...
KD Group had been able to achieve tremendous growth thanks to that uniquely artillery-obsessed tactical concept.
Now, the only thing left was air superiority. It was still a distant goal, but one day they intended to possess air power beyond Apaches and stealth aircraft, making sure not even a single sparrow could fly over North Korean skies.
After finishing his long speech, Nam Sanggi was panting.
This should be enough. The young man, who had spoken in a consistently argumentative tone, had gradually brightened, and even smiled from time to time.
It seemed he believed in his sincerity.
“The second leap for Korea’s defense industry is air power... Are you serious?”
“Of course. I am.”
“Then are you prepared for drones as well?”
“...Pardon?”
The pension fund representative smiled bitterly. Judging by his reaction, it seemed they had not even considered it yet.
“When you look at the recent conflicts in the international community, almost all of them involve drones. The main weapon of the Syrian rebels was drones, Israel’s strike on Iranian oil facilities was drones, Turkey’s strikes on the Syrian army were drones... Yet our defense industry has no preparations against drones?”
“...I don’t understand what you mean.”
Nam Sanggi was offended. No matter how much their relationship was one of power because of investment issues, this was crossing the line.
Why was he interfering in management using his stake as leverage? And when he was a complete layman in military matters, no less!
“Drones may be effective in small-scale localized conflicts. But in a full-scale war between nations, they are nothing but gnats.”
“Gnats?”
“Yes. I cannot go into detail due to military confidentiality, but the automatic defense system on our K-9 is beyond whatever you might imagine. Drones? Even if a hundred gnats swarmed us, they wouldn’t leave a single scratch on our armored forces.”
“Then what if there were a thousand of those gnats?”
“...Pardon?”
“No, considering their production cost is nearly one ten-thousandth, let’s say ten thousand to one. If ten thousand of those gnats swarmed us, would our armored forces still be safe?”
“...What exactly are you trying to say?”
“The reason our K-9 is drawing attention in the international community is probably not its specs, but its cost-effectiveness. Yet drones seem to be far more cost-effective than that. I won’t oppose the vertical spin-off of KD Techwin. There’s no need to prepare for an IPO. Hand the shares you were going to put on the market over to us in a block deal. Then the shareholders’ resentment won’t be so severe. But if you want to accept this proposal, prepare for drone warfare.”
Approval of the vertical spin-off, and on top of that, a promise to purchase all the shares.
For Nam Sanggi, who urgently needed to deal with inheritance, it was an offer he could not ask to improve upon, but his expression was not good.
“Manager Lee. I am truly grateful that you have expressed an intention to purchase the stake, but I believe what you just said crossed a line.”
His face was deeply displeased.
“This is not simply a matter of whether you are interfering in management or not. As a defense industry expert, I do not want to spend company money on something useless.”
“Is that so?”
“Yes! Listening to you, Manager Lee, it sounds as if drones overwhelm every cutting-edge weapon, but on what basis? If that were true, the United States would already have demonstrated a tactical concept centered on drones. But in the wars of the past twenty years, was there ever such a scene? Why are you urging us to develop such drones?”
“At one time, the United States greatly underestimated the potential of semiconductors. But now, there isn’t a business that can run without semiconductors.”
“...Pardon?”
“I’m saying the United States is not always right. They miss things too. And I believe the reason we’ve been able to live this well is because we were good at picking up what they missed.”
Saying that, the pension fund representative held out some business card.
“Take it. He is a Chinese broker who will help us. He has agreed to hand over technologies related to drone components. But the amount he wants is too large, and I have no way of preparing it myself.”
“...You want me to give money to this man?”
“This is as far as I, a non-expert, can help. But when our country’s top defense experts see this technology, they will surely feel a sense of crisis... I will choose to believe that.”
Nam Sanggi nearly had a fit.
“M-Manager Lee? What you’re saying right now is extremely dangerous. Of course, I don’t think that way, but to the prosecution, this could look like money laundering through a third party!”
“I came prepared for that... But I simply cannot explain a world where Germany is rearming and Poland is applauding it.”
“P-pardon?”
“It is still loose right now, but soon the Chinese authorities’ controls over drone components will become strict. Hurry.”
When the pension fund representative got up after spouting only absurd remarks, Nam Sanggi shouted.
“I-I can’t do it! If money is your goal, then please just tell me honestly. I will make clean money for you, money with no repercussions and no evidence, and give it to you. But I simply cannot accept drone development.”
The pension fund representative, who had turned away, let out a low sigh and said,
“Vice Chairman. Among your internal affiliates, there are a few with strangely visible traces of money leaking out. Shall I name them?”
“...Pardon?”
“You don’t seem to know. Our pension fund has previously dismissed Chairman Jo of Koreana over corruption and morality issues. Do you think we can’t do it twice?”
Fear immediately crept onto Nam Sanggi’s face. Management was not a profession one could perform like a saint.
With public sentiment already harsh, if the pension fund took the lead in challenging his control over management, he would fall like leaves in an autumn wind.
As if driving the nail in, the pension fund representative said,
“Why do you think power is frightening? It is frightening because it can turn even things that could be glossed over into major problems.”
“...”
“Give that man the money he wants, in the way he wants it. And bring that technology to me as well... I sincerely hope you understand.”
When he left, silence engulfed the vice chairman’s office for a long while.
*
“Team Leader Choi! Over here.”
“Hey—yeah, Manager Lee.”
That evening, after my meeting with KD Group.
I made plans with Team Leader Choi Gukhan, who happened to be in Seoul on a business trip. Unlike Jeonju, where most signboards went dark by ten at night, Seoul was a city that never slept, twenty-four hours a day.
Once we found a place nearby, Team Leader Choi started teasing me before the beer had even arrived.
“Well, well, look at this guy. Your face has brightened right up. It’s great now that you’ve escaped my nagging and gone independent, isn’t it?”
“Not at all. I really am suited to the overseas team. I want to go back as soon as possible.”
“Don’t play weak, punk. I heard you bought in all by yourself when the KOSPI circuit breaker tripped. Foreigners and institutions were all dumping then. What kind of guts did you have to scoop it up?”
“It was luck, that’s all... Haha.”
When I emptied a pleasant mouthful of beer, he asked,
“So, Manager Lee. What’s the reason you wanted to see me today?”
“There are a few things I’m curious about.”
“Curious? About what?”
“How much cash is the overseas team holding right now?”
As soon as the talk turned to money, Team Leader Choi sighed several times in a row.
“Don’t even get me started. It’s at an all-time high. The assets we disposed of during SB, the assets we disposed of during Pengda, and even the recent profits that came in from maturing commodities... We’re drowning in idle money.”
“You haven’t reinvested?”
“Look at the market. Where would we invest? If we touch European companies, they say the potential growth rate is in the zero-percent range. The U.S. has gone up, but far too much... I have no idea what kind of market this is. There isn’t a single thing that looks suitable.”
Polarization was not something that applied only domestically. Recently, polarization had been in vogue in global stock markets as well.
Because in the aftermath of COVID, the stock markets of developing countries, middle-income countries, and developed countries were all falling flat, while only the U.S. stock market was soaring.
“Because of high interest rates out of the U.S., even developing-country bonds don’t have much appeal these days. It’s really uninspiring.”
“Then you should reinvest in the U.S. That seems like the safest place right now.”
“Forget it. Does that index make sense to you? Somehow, it rises every time you open your eyes. The Nasdaq, the S&P—they’re hitting new highs day after day.”
“Isn’t that just how high expectations are for the Fourth Industrial Revolution?”
“That’s because you never experienced the dot-com bubble. Back then, stocks shot up if a company just had the word ‘network’ in its name. But when the bubble burst, it was an absolute disaster. No matter how I look at it, it’s too similar to that time. There are a lot of concerns internally right now about the market overheating.”
“I see... Then, Team Leader, how much do we have invested in Russia?”
Team Leader Choi, who had been emptying his beer, raised his eyebrows.
“In Russia? Russian investments?”
“Yes. Gazprom, Sberbank, Lukoil... and bonds. If you add them all up, how much does the overseas team hold?”
“Hard to say. Even with a rough estimate, it would be at least one trillion won. Just the Sberbank and Lukoil positions I’m handling are around a hundred billion won. But why do you ask?”