Mr. Grayken, keep the money!
By Oh Young-jin
Assistant managing editor
It was before the 2008 financial crisis that exposed Wall Street fat cats for what they really were: vampires sucking life out of people and undeterred by crosses, garlic or sunlight.
It was after I returned from a one-year sabbatical in Austin, Texas in 2005.
The defining moment in my stay in the Texan capital whose motto is “Keep Austin Weird” came just before I packed up and left.
I was looking to sell my 1998 Camry. I checked virtually all second-hand auto dealers in town but couldn’t get the offer I wanted. I posted an advertisement on a Korean community website and a couple of prospective buyers came by but no firm deal was made.
I had the impression they preferred to wait, knowing the price would go down as my days in Austin counted down. So I went back to the dealer, from which I bought the car. I had to wait because there were a couple of gorgeous lady customers ahead of me. The dealer was a former college football player from Indiana.
So when my turn came, I talked about the charm I had witnessed, performed on the lady customers (I detected it was his weak point, too).
Then, I told him that I wanted to sell back the car. Obviously still flattered, he checked out his small Kelly’s Blue Book and made an offer of $6,000. It was a better price by a significant margin than all previous offers and quite a bit higher than my own calculation using Kelly’s.
It took less than a minute for him to realize he made a mistake. A fleeting hint of distress on his face was good enough to catch him out. But I beat him by seconds and accepted his offer before he had a chance to retract it. We shook hands. I told him that I would drop off the keys a few days later and then changed my mind. I turned around on my way home and went back to the dealer’s in order to drop the car and keys for the fear that he might go back on his word.
When I returned, he was not there so I asked a clerk to call him. I talked to him about my decision to leave the car. I didn’t have any money on me so I decided to walk back. It would usually take about 10 minutes by car but, on foot, it took forever. It came across my mind that a man could die in the afternoon Texan heat
The purpose of this lengthy reminiscence of my “good ole days” is not to brag about a small victory but about the dealer’s determination to keep his word, even when he realized he made a mistake. I know people vary and there is bound to be a share of liars and honest men. Still, I take the dealer as an example of American honesty.
In 2006, John Grayken, chairman of the Dallas-based private equity, Lone Star, made a written pledge to donate $10 million to charity in Korea. His pledge followed a pledge of donation by Samsung Group to the tune of 800 billion won and another by Hyundai Automotive Group for the amount of 1 trillion won. The two Korean conglomerates were in trouble then and pledged to donate, saying that it was a bona fide gesture aimed at returning part of what they had earned to society. Few would take it at face value but some still took it to heart, considering a world of good the money could do for the underprivileged.
Lone Star was also in trouble. Obviously, Grayken took advice by somebody who knew Korea well and made his offer, hoping it would smooth the way for the sale of his controlling stake in the Korea Exchange Bank to Kookmin Bank.
The public was up in arms, not wanting to see a foreigner double its investment in profit and leave. I admit that a typical mob mentality played a part in the anti-Lone Star sentiment. Etched in our collective heart is a bitter memory that good firms of Korea Inc. were sold off at a basement price during the 1998 currency crisis and ended up in foreigners’ hands.
We have grown up in the name of globalization when money often ignores national borders and investments are a venture that one can win or lose. But there is an undeniable undertone of disapproval against foreign takeovers.
The Kookmin deal fell through. Afterwards, Lone Star tried HSBC and ANZ without success. Now, Hana has courted Lone Star and the chance is that their deal will eventually be consummated. Under the arrangement, Lone Star would get about 4.6 trillion won from Hana. It has already recouped all its investments in dividends and share sales. Of course, secondary issues such as taxes would remain to be resolved.
Grayken may be jubilant about the deal soon to be completed after repeated futile attempts. Or he may be anxious and can’t wait to leave Korea. If he forgoes his $10 million pledge, I don’t think that he has a legal obligation to honor it because it was a gentleman’s agreement. Maybe he can get away with a little bad publicity. Or if compared with the Austin dealer, he could say that his $10 million is far bigger than the dealer’s $6,000 so he wants a discount for all the bad memories he had in Korea. If that is the way he does business, so be it.