As the Korean government scored a one-sided victory in its dispute with the U.S. private equity fund Lone Star, former People Power Party leader Han Dong-hoon is drawing attention. As a prosecutor, Han investigated the Lone Star stock manipulation case and secured convictions. As Minister of Justice, when Lone Star won in part in an international arbitration, he filed an action to annul the award in response.
ChosunBiz met the former leader at a cafe in Jongno District, Seoul, on the 21st. He said, "During my time as Minister of Justice, I went all the way with the mindset that not a single penny of the people's hard-earned tax money could be paid out," adding, "The Democratic Party kept opposing it, saying, 'Are you going to pay the interest?,' but I was trying to protect the people's blood-like money of 280 billion won."
◇Secured both "guilty verdict for stock manipulation" and "win in arbitration award"
The former leader referred to Nov. 21, 2006, 19 years ago. He said, "On Nov. 21, 2006, we indicted the Lone Star corporation for stock manipulation," adding, "In the subsequent international arbitration with Lone Star, the Korean government's key weapon, its only ultimate trump card, was that we had already proven in the criminal trial that Lone Star was responsible for stock manipulation."
Lone Star bought 51% equity in Korea Exchange Bank in 2003 for 1.3834 trillion won. Nine years later, in Jan. 2012, it sold Korea Exchange Bank to Hana Financial Group for 3.9157 trillion won. It netted 4.7 trillion won in sale profit and also pocketed several trillion won in dividends over nine years.
Even so, in Nov. 2012 Lone Star filed an investor-state dispute (ISD) arbitration seeking an order for the Korean government to pay $4,679.5 million (about 6.86 trillion won) in damages. The claim was that it suffered losses because the government delayed approval of the sale.
The Lone Star stock manipulation case that the former leader handled as a prosecutor became a key basis supporting the Korean government's position in the international arbitration. Among the various criminal trials related to Lone Star, the only one where guilt was recognized was the stock manipulation case.
The former leader said, "In the international arbitration, Lone Star argued that the delay in the sale was discrimination against a foreign investor by the Korean government and the National Assembly," adding, "In the process, they even brought National Assembly transcripts and claimed they were persecuted due to the nationalist sentiments of the government and the Assembly."
The decisive evidence that toppled Lone Star's argument was the guilty verdict in the criminal stock manipulation trial. As a prosecutor, the former leader uncovered that Lone Star committed stock manipulation by spreading a "capital reduction" rumor while merging KEB Card, which had been a subsidiary of Korea Exchange Bank. In 2006, the Lone Star corporation and Yoo Hoe-won, former head of Lone Star Korea, were indicted, and in 2011 the Supreme Court affirmed the guilty verdict.
He said, "We found proof in emails of key executives at a U.S. advisory firm that the capital reduction rumor was false, and we persuaded them to testify in a Korean court," adding, "As for how intense the first trial was, I was based in Busan then and only came up to Seoul for hearings; I even remember a hearing that started at 10 a.m. and went on until 4:30 a.m. the next day, after which I went straight back down to Busan."
The former leader explained that thanks to having Lone Star's stock manipulation recognized as a crime, the international arbitration could also tilt in Korea's favor. He said, "If you look at the ICSID ruling in Aug. 2022 that acknowledged 280 billion won should be paid to Lone Star, even the majority opinion accepted that Lone Star committed stock manipulation," adding, "Brigitte Stern, a very prominent arbitrator, issued a dissent that, since stock manipulation was recognized, not a single penny of compensation should be awarded."
The former leader said, "With that logic, I was convinced we could make the compensation 'zero,'" adding, "Given national dignity, how could the country pay compensation to (stock manipulation) criminals?"
◇Protecting 7 trillion won in public funds is the national interest; the Democratic Party has no standing to chime in
The Lone Star case is a subject both the ruling and opposition camps want to avoid. The sale of Korea Exchange Bank to Lone Star happened under the Kim Dae-jung and Roh Moo-hyun administrations, and the working-level officials who led it then, including Choo Kyung-ho and Han Duck-soo, are all in the People Power Party.
Speaking of the "national interest," the former leader said the Lone Star matter is something any politician should naturally care about and attend to, regardless of the administration or party. He said, "What does a change of administration have to do with protecting 7 trillion won in public funds?" adding, "The default in politics should be the national interest."
He also said, "I have no intention of vying for credit," adding, "If the government had announced it as a victory for the Republic of Korea, I would have applauded and left it at that, but since they called it 'a triumph of the Lee Jae-myung administration,' I had no choice but to set the facts straight."
Citing instances where Democratic Party figures hamstrung the filing of the annulment action, he said, "The Democratic Party has no standing to chime in here," adding, "Weren't they the very people who actively opposed it?"
On the Democratic Party's praise of BAE, KIM & LEE LLC as the main contributor to the victory, he said, "They were the ones who pressured us not to use BAE, KIM & LEE LLC, to cut them out, claiming the firm showed a tone that seemed to defend Lone Star in another case," adding, "We chose BAE, KIM & LEE LLC because it had experience beating Lone Star in the Olympus Capital case, but it was the Democratic Party that tried to block that by demanding all kinds of materials and pressuring working-level officials."