[Donghae Group, Drowning in Debt Due to Reckless Management and Aggressive Mergers & Acquisitions]
The Seoul District Court has approved the debt workout application of Donghae Group, best known for its flagship brand, "XX Cooking Oil."
With this decision, all debt repayments for eleven Donghae Group subsidiaries—including the parent company Donghae Oil, Donghae Peregrine Securities, Donghae Peregrine Investment Trust Management, and Donghae Mutual Credit Union—have been frozen.
Donghae Group's debt is currently revealed to amount to 960 billion won. Chairman Woo Yong-gap has issued a public apology, pledging to do his utmost to restore the group's operations swiftly.
Meanwhile, creditors—whose claims are now effectively frozen—are responding cautiously to the court's decision…
Seok-won snorted as he read the Donghae Group article in the newspaper.
"Hmph. Just as I thought—he doesn't say a word about taking responsibility or stepping down."
Unlike court receivership, where a court-appointed manager oversees the company, a debt workout allows the existing management to retain control.
Though the system was designed to encourage more autonomous negotiations between debtors and creditors, reality had proven otherwise.
"In practice, it became just another tool to avoid temporary default during the IMF crisis while clinging to management rights."
Chairman Woo Yong-gap's behavior was a textbook example of that abuse.
"But this time, that trick won't work."
With major conglomerates like Hanbo, Gichang Motors, and Daekwang Group all facing bankruptcy and triggering massive restructuring, the odds of Donghae Group surviving such a storm were slim.
"Even if they manage to stay afloat by some miracle, I won't just sit back and watch."
As Seok-won muttered coldly to himself, his phone vibrated on the corner of his desk.
He checked the caller ID and immediately answered.
"It's night in New York. You're still awake?"
[Actually, I was just about to go to bed after speaking with you.]
Hearing Landon's response, Seok-won chuckled and leaned back in his chair.
"What's so urgent that you'd call before sleeping?"
[Woo Ho-geun, who was under surveillance, left for Nassau today.]
Seok-won's eyes gleamed sharply.
"Nassau? That means he's gone to the Bahamas."
[That's right. And not on a commercial flight, either—he chartered a private business jet.]
"The Bahamas... a perfect place to hide in luxury and escape the law."
[Turquoise seas, soft white sand, tall beauties in bikinis—it really is a dream spot.]
"Hearing you say that, I assume your wife's not around?"
[Haha, of course not. She went to bed earlier.]
Seok-won chuckled at Landon's playful reply.
His gaze drifted to the large black-and-white photo of Chairman Woo Yong-gap on the newspaper spread across his desk.
"If he flew out on a private jet, it means he funneled out a hefty slush fund before filing for court protection."
[From what we've confirmed so far, there's over 80 million dollars stashed away—including 30 million from Donghae Oil's U.S. account originally intended for soybean imports, and more for a golf course purchase in Phuket, Thailand.]
Seok-won frowned deeply.
"To think he carefully tucked that money away while standing on the brink of bankruptcy... With that kind of cash, he couldn't have repaid all the debt, but he might've been able to negotiate with the creditors to restore the company."
[Exactly. When a ship sinks, the captain is supposed to be the last to leave. But he ran off to save his own skin. That man has no right to call himself a leader.]
Seok-won nodded slightly, still holding the phone to his ear, as if agreeing silently.
"You've got a tail on him, right?"
[Of course. I sent two top-notch private investigators to the Bahamas.]
"Make sure they track his every move. Don't let a single detail slip."
[Understood.]
As the call ended and Seok-won set the phone down, he muttered in a chilling, sunken voice:
"He's cast all his employees out onto the streets so he can live it up in comfort? That's not going to happen. Not on my watch."
***
October 6, 1997 – Gimpo International Airport
Deputy Prime Minister for Economic Affairs, Lee Eun-hyung, returned from the KOPE conference held in Bangkok, Thailand. Emerging from the VIP passageway, he looked visibly tired. As soon as he appeared, Financial Policy Director Jung Ji-hoon, who had come to greet him, quickly stepped forward and bowed respectfully.
"Welcome back, sir."
"Ah, yes."
"I have a car waiting just outside. Let's head that way."
Deputy Prime Minister Lee gave a small nod, glanced around briefly, and then began walking, following Director Jung's lead.
Since his arrival time had been kept secret, there were no reporters in sight. Once outside, two black sedans—a luxury Equus and a Sonata—were parked side by side.
Deputy Prime Minister Lee and his entourage split between the two vehicles, which immediately pulled away from the airport and headed into downtown Seoul.
Director Jung, seated in the front passenger seat, turned to look at Deputy Prime Minister Lee sitting behind him and spoke.
"The Blue House has requested that you come directly to report the outcome of the meeting."
Though exhausted from the long flight and extended discussions with IMF President Paul Townsend, the mention of the President's summons drew a quiet sigh from Lee Eun-hyung.
"All right."
Director Jung noticed the Deputy Prime Minister's dark expression and sensed that the meeting results had not been favorable. He fell silent and turned to face forward, leaving the cabin quiet except for the hum of the engine.
Leaning back into the soft leather seat, Lee Eun-hyung stared out the window, his face heavy with concern.
A short while later, they arrived at the Blue House. After getting out of the car, Lee walked into the main building with Director Jung.
They passed through a thickly carpeted corridor and entered an antechamber, where a familiar staff member from the presidential secretariat immediately delivered a message.
"His Excellency has instructed that you go in as soon as you arrive."
Nodding in acknowledgment, Lee Eun-hyung turned to Jung Ji-hoon.
"Wait here."
"Yes, sir."
He straightened his clothes, slightly rumpled from the flight, knocked lightly on the large wooden door, and stepped inside.
In the spacious office, President Kim Sung-kyu was seated on a sofa with Chief Secretary Koo Hyung-ki beside him.
Deputy Prime Minister Lee approached and gave a deep bow. President Kim, seated at the head of the sofa, turned his head to acknowledge him.
"Did you come straight from the airport?"
"Yes, sir."
President Kim Sung-kyu gestured with his chin toward the empty sofa to his left.
"Have a seat."
"Yes, Mr. President."
He waited for Deputy Prime Minister Lee to sit before asking, one leg crossed over the other.
"So, what did President Townsend have to say?"
Lee Eun-hyung responded, his face clouded with concern.
"He said the only way for Korea to escape its current crisis is to apply for IMF bailout funds as soon as possible—every day counts."
"Hmph. That's their take on things."
As expected, the President's reaction was far from enthusiastic. Lee sighed inwardly before continuing.
"I'm not eager to go to the IMF either, but both the United States and Japan have made it clear that they won't help us directly unless we go through the IMF. That leaves us with no alternatives."
"Tsk… If we do apply for a bailout, how much assistance could we expect?"
Clicking his tongue in disapproval, President Kim reluctantly asked the question. Lee responded immediately.
"Korea's IMF quota stands at 1.1 billion dollars. However, based on precedents from countries like Mexico, Thailand, and Indonesia, which received prior bailouts, it's likely we could receive support up to 500% of our quota."
At that, Chief Secretary Koo Hyung-ki furrowed his brow and cut in.
"But that's only about 5.5 billion dollars, isn't it?"
President Kim's expression also betrayed his disappointment at the figure, which was clearly less than he had hoped for.
"That's the minimum, sir. On top of that, if we include additional funding from institutions like the Asian Development Bank and the International Bank for Reconstruction and Development, which often work alongside the IMF, we could secure over 20 billion dollars in foreign reserves."
Only then did President Kim's expression begin to soften. He asked, somewhat cautiously,
"Would that be enough to pull us out of the currency crisis?"
"Given the size of our foreign debt repayments, it's still not quite sufficient. But the real problem isn't the fundamentals of our economy. What we're facing is a sudden freeze in foreign currency liquidity. If we can secure IMF support and reassure the market that Korea can raise foreign currency whenever needed, confidence will be restored, and the market will stabilize."
It wasn't that the Korean economy was fatally flawed. The real issue lay in an excessive volume of short-term debt and extreme currency volatility, which had triggered a sudden liquidity crisis.
In human terms, Korea had suffered a stroke—blood circulation abruptly cut off—causing its economic system to collapse, despite being otherwise healthy.
"Nothing comes for free. If the IMF provides bailout funds, they'll surely want something in return. What is it?"
Deputy Prime Minister Lee Eun-hyung hesitated for a moment before finally opening his mouth to answer President Kim Sung-kyu's question.
"The specifics will need to be negotiated with the IMF after we formally apply for the bailout. But it's highly likely they'll demand major reforms under the pretext of transitioning our developing-economy structure to one befitting an advanced economy. That could include abolishing the fixed exchange rate system, opening up our financial markets, and implementing large-scale restructuring."
At that, Chief Presidential Secretary Koo Hyung-ki scowled, clearly displeased.
"That sounds like blatant interference in our domestic affairs!"
"I understand it's an excessive demand, but from the position of a country requesting aid, we'll likely have to accept at least some of their conditions," Lee replied calmly.
President Kim let out a long, low groan.
"Mmm…"
Lee, reading the president's expression, pressed on, urgency in his voice.
"We've reached a point where we can no longer hold out alone. The crisis has become so acute, we can't afford any more hesitation."
Seeing the desperation on Lee's face, the president, arms crossed and silent for a while, finally forced the words out.
"We have no choice. We must prevent a national default at all costs. Proceed with the request for IMF bailout assistance."
Lee, who had been anxious that the president might stubbornly refuse to acknowledge the gravity of the situation, let out a silent breath of relief and bowed his head.
"I'll take care of it."
After discussing the next steps, Lee Eun-hyung left the office and was walking down the hallway when a voice called out from behind him.
"Wait. May I have a word?"
He stopped and turned around to see Koo Hyung-ki approaching.
"If you're not in a hurry, could we talk for a moment?"
"...?"
Lee was puzzled, but the fact that Koo had followed him out suggested it was something important.
Sensing this, he turned to his aide, Director Jung Ji-hoon, and gestured slightly with his chin.
"Go ahead to the car."
"Yes, sir."
As Jung tactfully stepped away, Secretary Koo glanced around to ensure no one else was nearby. Once he confirmed they were alone, he spoke in a serious tone.
"If we end up taking IMF bailout funds for the first time since our country's founding, the public is going to be deeply shocked."
"Of course. But to avoid worsening the situation, we have no choice but to face it and push through," Lee replied.
"Even so, if we want the public to accept that this was an unavoidable decision—and to calm their outrage—someone has to take responsibility for allowing things to deteriorate to this point."
Secretary Koo then silently looked Lee in the eye.
Realizing what he meant, Lee's face hardened. He asked in a low voice,
"...Are you suggesting I take responsibility and resign?"
Koo nodded.
"I don't say this lightly, but I hope you'll see it as a sacrifice for the sake of the nation."
"...Is this the President's will?"
"That's correct."
Realizing that the President intended to use him as a scapegoat to cover up the mismanagement that had led to the foreign exchange crisis, Deputy Prime Minister Lee Eun-hyung felt a wave of dizziness wash over him. A surge of betrayal, sharp and overwhelming, crashed down on him.