The Chaebol Returns To The Presidency 1967 [EN]: Chapter 143

143. Hand Over the Chairman Position

The attending accountant explained,

“Chairman, Cargill and the derivatives company are separate entities. It’s illegal for Cargill’s money to go to the derivatives company.”

“Illegal? It’s illegal to use my own money?”

“Listed companies have accounting laws to abide by. Internal transactions were never a problem when it was a family company, but if you push it through in the listed state, it becomes embezzlement and misappropriation of funds.”

“Embezzlement? How is it embezzlement when it’s my money?”

“It has now become a joint-stock company owned by shareholders. It’s not personal property.”

“Huh, what a predicament!”

The chairman (CEO) turned pale.

The attending accountant also looked dumbfounded.

He couldn’t help but lament the unimaginable harm caused by the stubborn old man, stuck in the ways of a family business, trying to manage without even knowing these basic rules.

“Company Accountant, what if we don’t record it in the accounting books and just borrow the money temporarily?”

“Are you talking about window dressing [manipulating financial statements to present a misleadingly positive image] with a double ledger?”

“That’s right. We can pay it back later.”

“That’s also a clear violation of the law.”

“No, if this is illegal and that’s illegal, is there no way to do it accounting-wise!”

“We can process it as a loan, lending money through accounting.”

“Oh, really! That would work. Let’s lend money to the derivatives company at a long-term, low interest rate.”

The accountant gave roundabout advice.

“The public market’s main functions are transparency, fairness in management, and shareholder interests. You need to become familiar with management activities that fit that environment.”

President Jung asked the chairman, even though he already knew.

“Chairman, what’s the reason for giving money to the derivatives company?”

“I took out a loan from the bank using my house and land as collateral. The interest is snowballing, and if I can’t pay it back, it will all be auctioned off. My foundation will be taken away. Isn’t my home more important than the company?”

Since he wouldn’t be able to make money from Cargill to supply the derivatives company in the future, it was as good as bankrupt.

*

Ahead of Cargill’s first shareholders’ meeting, the feared event finally occurred.

The auditor called the chairman in to demand an explanation.

“Chairman, what’s the reason for lending 3/4 of the capital from the listing to the derivatives company?”

The chairman, accompanied by the accountant, replied curtly.

“Is there a problem accounting-wise?”

He was still annoyed that people were interfering with his decisions.

“There’s no problem accounting-wise, but there’s a big problem management-wise.”

“Management-wise? It’s not like the deficit has increased on the books, and it’s not like I’ve embezzled capital. What’s the problem?”

“The chairman has a duty to maximize the interests of the shareholders. But you’ve damaged Cargill by lending to a failing company for personal reasons.”

“Damage? We’re receiving interest, even if it’s low. What damage are you talking about?”

“Derivatives are an extremely high-risk field. If the derivatives go wrong, Cargill could collapse. This amount is a major issue that should have been decided at the shareholders’ meeting, not by the board of directors.”

“If the board of directors decides, shouldn’t the shareholders just receive dividends later?”

“…….”

He was truly impossible.

The auditor said,

“You didn’t even disclose these important management decisions to the shareholders.”

“Disclose?”

The chairman looked at the accountant, who explained,

“Chairman, it’s a system where you notify shareholders when there are significant changes in management.”

The auditor said,

“If you don’t even follow this procedure, I, as the auditor, cannot give a proper opinion.”

If the auditor assessed it as inappropriate or refused the audit, trading on the stock market would be suspended, and in severe cases, the listing could be revoked.

The accountant advised the chairman.

“Chairman, it would be best to make a disclosure now, even if it’s late.”

“Really? Hmm, the procedure is quite cumbersome. Alright, Auditor! I’ll disclose it. Is that enough?”

“…….”

*

The disclosure that Cargill had lent money to the derivatives company was released.

Investors were in mental breakdown.

“What? They lent this much money to a derivatives company?”

“This derivatives company is full of deficits!”

The stock price plummeted by 38%.

Taking advantage of the plunge and sell-off, President Jung, Tiger Fund, BlackRock Fund, and Vanguard Fund massively bought Cargill’s stock.

With old shares to new shares issued at a ratio of 1:2, the Cargill family’s stake had shrunk to 29%, and President Jung’s to 4%, but President Jung raised it to 12% at once.

The three fund companies bought 18%.

*

Cargill’s shareholders’ meeting.

The emcee proceeded with the agenda.

“Next is the election of the chairman.”

The chairman’s family, sitting in the front row, were enjoying the meeting they were experiencing for the first time.

Of course, President Jung also attended this meeting.

The chairman was wearing a flower on his chest and was already in the mood for re-election.

“I’ll feel like this when I’m elected governor.”

“Of course, Father. You haven’t forgotten your speech, have you?”

“I keep forgetting, so I wrote it down in this notebook.”

The emcee proceeded.

“Are there any objections to the re-election of the current chairman, Robert?”

At that moment, someone raised their hand.

“I object!”

All eyes turned to the speaker.

The chairman couldn’t hide his displeasure.

“Who dares to rebel?”

The son stopped him.

“Hold on, Father. The general meeting is originally for discussions for and against. The decision is made by the number of shares held anyway, so just block your ears.”

“Really? Hmm, I understand.”

The speaker picked up the microphone and stood up from his seat.

“I am Nelson, the head of operations at Tiger Fund America. Tiger Fund holds 7% of Cargill’s shares.”

He was not a minority shareholder but one of the major shareholders, causing a stir among the attendees.

“This chairman was once part of a family company and lent a large sum of money to a derivatives company that is recording large deficits, causing the stock price to plummet. This clearly caused great damage to the company and shareholders. The current chairman of Cargill, who has caused losses due to outdated management, should be replaced with a more capable person.”

The chairman’s family was shocked.

“What? Is that guy trying to kick me out?”

The chairman jumped up and shouted, pointing his finger.

“No way! This is my company! My family and I have the largest stake!”

The son stopped him.

“Calm down, Father!”

The emcee said,

“Since the pros and cons are evenly matched, we will decide by vote. Those who agree to the re-election of the chairman, please raise your hand!”

The chairman’s family all raised their hands.

“Why isn’t President Jung raising his hand?”

“I’m on the opposing side, Chairman.”

“Opposed! I was going to treat you like a major shareholder, but you’re rebelling? You’re fired from your position as director after this meeting! Be prepared!”

“…….”

The emcee said,

“Now, those who oppose the re-election of the chairman, please raise your hand.”

Most of the attendees, including President Jung, raised their hands.

The chairman snorted.

“Is this a class meeting? What matters is the stake, not the number of people. How laughable!”

The staff collected the share notification forms from the opposing attendees and took them to the accountant and auditor for verification.

The emcee announced,

“With President Jung’s 12% stake, Tiger Fund’s 7%, BlackRock Fund’s 5%, Vanguard’s 6%, and other minority shareholders, totaling 30.1%, the re-election of the current chairman is rejected.”

Bang! Bang! Bang!

The chairman’s family was in collective mental breakdown due to the rejection of the re-election.

“H, how did this happen?”

“Father, this is a disaster! All the fund companies opposed it.”

“T, this can’t be….”

President Jung had put effort into the corporate disclosure operation for this vote.

The chairman tried to stand up and shout again, but his vision went dark, and he collapsed in his seat.

“Father!”

The chairman was taken out for emergency measures, and the meeting continued.

The emcee proceeded.

“We will now receive recommendations for the new chairman.”

The CEO’s son raised expectations, hoping for the best.

However….

The representative of BlackRock Fund said,

“We recommend Director Jung Joo-hyun as the chairman! He is the most suitable person to maximize shareholder interests, as he has been managing several businesses and breaking high-profit records in every business he touches.”

Director Jung shrugged his shoulders.

Someone shouted,

“I second that!”

Applause erupted from the audience.

Only the son, the managing director, barely maintained his position as a director as a family representative, and the chairman and the remaining three directors were filled with people recommended by each fund company.

The chairman’s family was dumbfounded.

*

Having heard the news from the hospital, the former chairman screamed.

“T, this can’t be! This can’t be happening! The company that our family has raised for three generations is being handed over to a yellow monkey from the East!” [offensive term, but kept to preserve character’s prejudice].

“Father, this is clearly a fraud. Let’s sue.”

“We must sue!”

They filed a lawsuit, but the Robert family lost the case as President Jung’s acquisition of shares was judged as a legitimate investment.

All the funds lent to the derivatives company were recovered.

The derivatives company went bankrupt.

As news spread that the board of directors had been replaced, funds were recovered, and Cargill had started trading with China, the stock price soared by 48%.

Former Chairman Robert sold all of his shares.

The fund companies made huge profits.

President Jung came to possess a giant grain major [major company specializing in grain trading and processing].

*

The South Korean president spoke with President Jung on the phone.

The president, having heard the details of the acquisition process, repeatedly expressed admiration.

“Now, President Jung seems to have completely shed his political persona. He has become a perfect businessman.”

– It’s all thanks to Your Excellency.

“How did you come up with such a method?”

– You might be surprised.

“…….”

– I learned it from an inmate in prison.

“Ah! Are you talking about those guys you said you met who were economic offenders?”

– Yes. I met with someone serving time as a corporate raider [an individual or group that acquires a company to take over its assets and operations] and received detailed instructions on the method. However, I applied it to proceed legally.

“Ah, that’s amazing, amazing! To take a thief as a teacher.”

– Even the same water, if a snake drinks it, it becomes poison, and if a cow drinks it, it becomes milk.

“Hahaha, I learned something from you this time, President Jung!”

– You flatter me, Your Excellency!

“Let’s have a drink of soju [Korean distilled rice liquor] on the rooftop garden soon.”

– I’ll drink it after the Monsanto project is over. The results are out, so I have to go right away today.

“Ah, the results are out. Let’s do that. Good work, President Jung!”

*

The President’s conference room.

Director-General Léon of the International Agency for Research on Cancer was explaining the research results on the harmfulness of Monsanto’s Roundup herbicide glyphosate in front of about 20 officials, including the president, President Jung, the chairwoman of the Women’s Association, the representative of the food company, the Minister of Health and Welfare, and the president of the Medical Association.

This explanation was being recorded with broadcasting station cameras.

In fact, this was Director-General Léon’s second explanation in Korea.

He initially explained it to President Jung, but President Jung said that it was not something that he could hear alone, so he contacted the president and made the matter bigger. The result was the same as the current situation.

Léon was nervous, sweating profusely because it was sudden and because the president was present.

A French interpreter and a biochemist with a doctorate from France were mobilized to translate Léon’s every word and phrase.

“E, the most difficult problem was that humans do not have the shikimate pathway [a metabolic route in plants and microorganisms] that works in plants. Even after repeated experiments, the experimental mice never died. I wondered if Monsanto’s claim was correct.”

“…….”

“But I received a call from Korea. They told me to look at the internal organs of the experimental mice. I dissected them and observed the microorganisms, cellular immunity, and organs of the digestive system. Thanks to that, the 90-day experiment lasted well over a year. Of course, it was worth it.”