January 23, 1998 — The Plaza Hotel, New York.
Seated on the penthouse sofa with one leg crossed, Seok-won, dressed in a cashmere coat, was waiting for the helicopter that would take him to the airport. He was scheduled to return to Korea today.
Just then, he felt a vibration from his inner pocket. Taking out his phone and checking the caller ID on the screen, he answered.
"Hello?"
[Boss! Thank goodness. You haven't left yet.]
"We said our goodbyes yesterday. What's the matter?"
[Peregrine Securities in Hong Kong just declared bankruptcy.]
"...!"
Seok-won's eyes widened slightly in surprise, but he quickly regained composure and responded calmly.
"So HSBC, Deutsche Bank, and Citibank's emergency offer of $100 million in bailout funds didn't go through after all."
[The sale of a 24% stake to Zurich Group of Switzerland for $200 million fell through. Then things worsened in Indonesia, and with $260 million in bonds now unrecoverable, they immediately pulled out.]
Just like Korea, Indonesia had entered an IMF bailout program and was undergoing extreme internal chaos due to the harsh restructuring and austerity demands.
[They were already carrying more than $400 million in debt. Seeing another massive loss pile on, they must've concluded it was hopeless.]
"They were probably also afraid that more contingent losses were still hidden."
[A single misstep, and they'd be stuck in a deep quagmire. So they backed off.]
Phone still to his ear, Seok-won gave a small nod.
"I warned them. But if they didn't clean up those bad Indonesian bonds, it means they couldn't overcome their greed."
Recalling the face of Richard Lee, the CEO he had met in Hong Kong, Seok-won muttered inwardly.
In order to unload the bonds, they would've had to take significant losses. Perhaps they hesitated and ended up missing the right timing.
But it was water under the bridge now. Brushing aside the thought, Seok-won adjusted his grip on the phone.
"The largest investment bank in Hong Kong collapsing like this—it's bound to cause a major shock."
[The moment the bankruptcy was announced, Henry Wu, the Chief Executive of the Hong Kong SAR, rushed to reassure the public by promising that the government would fully guarantee all deposits from individual investors. He's doing everything he can to contain the panic.]
"That alone won't be enough to quell the fear."
[I agree completely.]
Seok-won tapped his knee lightly with one hand and issued instructions.
"Since the aftershocks will continue for a while, keep a close eye on the situation and start building a long position in U.S. and German government bonds."
[You're expecting that the growing market anxiety will drive investors to flock toward safe assets?]
Seok-won gave a pleased smile at how quickly the intent was understood without needing further explanation.
"Exactly. When fear is this high, it's human instinct to move money somewhere safe."
[Indeed. Then how large should the position be?]
After a brief moment of thought, Seok-won answered.
"Use one billion dollars and leverage it to the maximum."
[Excuse me? But if we do that, the total amount will balloon to something enormous.] Landon spoke in alarm.
When buying government bonds, they could be deposited at a bank and used as collateral to borrow more funds and buy more bonds, repeating the process.
At the time, leveraged investing was standard practice, with no significant restrictions, so a $1 billion investment could be expanded into hundreds of billions or more in actual transaction volume.
But unlike the worried Landon, Seok-won responded calmly, as if it were no big deal.
"It'd be a problem if bond prices were to drop, but right now that risk is almost nonexistent—so just do as I say."
There were risks, of course, but even Landon admitted that for now, U.S. and German bonds—as safe-haven assets—were unlikely to fall and far more likely to rise. He soon nodded in agreement.
[Understood. I'll carry out your instructions.]
"Others are likely thinking the same thing, so make sure we secure our volume quickly."
[Yes, sir.]
After ending the call, Seok-won lowered the phone from his ear and muttered softly to himself,
"So it begins."
The financial instability triggered by the Asian currency crisis was about to set off a massive, unforeseen, nuclear-level shock that would shake the entire global financial market.
"The helicopter has arrived."
Hearing the words of his assistant secretary, Han Ji-sung, Seok-won rose from the sofa.
"Alright, let's head out."
Passing through the front door held open by Baucus, his burly bodyguard, Seok-won exited the penthouse with his entourage and made his way to the helipad on the hotel rooftop.
***
January 28, 1998 – Hannam-dong, Seoul, the Park family estate.
From early morning on Lunar New Year's Day, Chairman Park's mansion—surrounded by tall walls—was bustling with people.
The narrow alley was completely filled with vehicles, and even the street outside was lined with the cars of group affiliate CEOs and executives parked on both sides.
This year was especially crowded, with executives from WB Bank—newly acquired by Seokwon—also making their way to the Hannam-dong family home.
"Chairman, happy new year!"
Go Youngil, now head of the newly rebranded WB Bank born out of Daheung Securities, bowed deeply alongside six bank executives standing in line behind him, delivering the New Year's greeting in unison.
Chairman Park Tae-hong, dressed in traditional hanbok , couldn't hide the pleased grin that kept tugging at his lips as he welcomed the group from WB Bank.
"I hope only good things come your way this year."
"Thank you, sir."
President Go bowed even lower in response.
He also respectfully nodded to Seok-won—standing beside Chairman Park along with his elder brother, Park Jin-hyung.
As the bank delegation stepped aside to make way for others, Chairman Park beamed with pride.
Just as the saying "blue comes from indigo but is bluer than indigo" implies, his second son had far surpassed him, now owning the largest bank in Korea. There was a pride in his eyes that couldn't be hidden.
Next came President Min Pil-gi and the department store executives, stepping forward to offer their greetings. With a kind smile, Chairman Park responded to each one with warm words.
"Director Choi, I hear your son got into Seoul National University this year. Congratulations."
"Thank you, Chairman."
"President Min, make sure to take good care of your health. A healthy body leads to healthy leadership."
"Yes, sir. I'll keep that in mind."
While greetings were exchanged, the large living room—cleared of the usual sitting area—was now filled with a long table laden with steaming rice cake soup topped with colorful garnishes, short ribs, and a feast of traditional holiday dishes.
After completing their formal greetings, the affiliate presidents and executives took their seats to enjoy the food in a lively and cheerful atmosphere.
With Gunsan-daek (the longtime housekeeper) and several helpers moving back and forth between the kitchen and living room with food, the room was filled with the sound of shared blessings and laughter.
Though the nation was reeling under the harsh waves of the IMF crisis, the Daheung Group, thanks to Seok-won, had managed to stay a step removed from the turmoil—allowing them to relax, laugh, and enjoy the holiday with peace of mind.
That evening, after everyone had gone, Chairman Park sat on the sofa in his study, looked over at his two sons, and said with a pleased face:
"You both worked hard today."
"Weren't you exhausted from having to meet people since early morning?" asked President Park Jin-hyung with concern.
"I'm not so old that something like that would tire me out—don't worry."
Chairman Park Tae-hong responded with a light chuckle, then pulled a cigarette from a wooden case on the table, placed it between his lips, and lit it.
He inhaled the white smoke deeply and slowly exhaled before shifting his gaze to his eldest son, President Park Jin-hyung.
"Since we're all here, you might as well go ahead and tell Seok-won."
"Yes, sir."
Jin-hyung adjusted his posture and looked at his younger brother seated across from him.
"You probably already heard that Nasan Group defaulted while you were in the U.S."
Seok-won gave a small nod and replied.
"They defaulted on payments to five banks, totaling 11.6 billion won. Out of Nasan's 719.5 billion won in bank credit lines, WB Bank also took a hit—around 30 billion, if I recall."
Looking at his father and brother, Seok-won asked curiously,
"But why are you suddenly bringing up Nasan Group?"
"The presidential transition committee reached out to ask if we'd be willing to acquire Nasan Department Store."
"Nasan Department Store?"
Seok-won's face registered slight surprise. President Park Jinhyung nodded solemnly.
"Yes."
Nasan Group was a conglomerate centered on fashion, construction, and retail, comprising 13 affiliates and generating annual revenues of 1.3 trillion won, ranking 57th among Korea's business groups.
But like many others, it had fallen into a liquidity crisis due to reckless borrowing and finally collapsed just days before Lunar New Year.
"Chairman Eom Seungseop of Nasan is from Hampyeong in South Jeolla Province, so many of the group's businesses are based in that region. Now, with this default, the Gwangju and Jeolla economies are going to take a serious blow."
"Their affiliate Gichang Motors in Jeolla has shut down, and the heavy industries plant in Yeongam is also closing. Things were already bad—and now with Nasan's collapse, it's like adding fuel to the fire."
"Exactly. Construction on four sections of the Gwangju subway project, handled by Nasan Construction, has come to a halt. And even the large discount store that opened just four months ago had to shut its doors."
Seok-won quickly grasped the situation and nodded in understanding.
"For President-elect Kim Jaechun, whose political base is in Jeolla Province, and his New Era
People's Party, this must be a serious crisis just ahead of the inauguration. So they want us to take over Nasan Department Store to ease the situation?"
"That's right. Thanks to you, our department store business is in relatively good shape, so they're asking if we'd consider acquiring it."
"At that level, it's not really a request—it's practically an order."
President Park Jinhyung gave a wry smile at his brother's comment.
"True—but the conditions they're offering aren't bad."
"What kind of terms?"
As if they were finally getting to the real point, Park Jinhyung leaned forward in his seat.
"They've proposed forgiving half the debt and providing 70 billion won in acquisition funding through Korea Development Bank at low interest and long-term terms."
"If they're writing off part of the debt and even lending the money for the acquisition, it's certainly not a bad deal."
Seok-won replied, stroking his chin thoughtfully with one hand.
"Your brother and I both think the offer is quite reasonable. What do you think?"
Chairman Park Tae-hong asked, holding a cigarette between his fingers. Seok-won deliberated for a moment before giving a firm nod.
"Nasan Department Store itself has been generating steady sales—it just overextended itself with excessive loans. So I think acquiring it isn't a bad idea. Even if we exclude the Gwangju branch, the stores in Gangnam and Gwangmyeong alone make the land worth investing in."
Then, turning to his father, he added,
"And strategically, it would be good to owe the President and the ruling party a favor—especially if we want to smoothly bring Korean Express under our control later."
Chairman Park Tae-hong was visibly pleased with the positive answer.
"Then let's go ahead and acquire Nasan Department Store."
"But if we do go ahead with the acquisition, there's one thing that absolutely needs to be done."
"What's that?"
Chairman Park asked with a cigarette in his mouth, and Seok-won replied in a serious tone.
"We need to shut down the Nonhyeon branch and completely demolish the building."