Elliott expresses disappointment over Korean gov't decision to appeal

By Anna J. Park

Elliott Investment Management expressed regret over the Korean government's decision to appeal a ruling by the Permanent Court of Arbitration (PCA). The U.S.-based hedge fund company argued in an official statement that the Korean government's decision to seek an appeal sends the wrong message to foreign investors.

“The Republic of Korea's (ROK) refusal to honor the Tribunal's unanimous decision ― which, after five years of thorough litigation, found against the ROK on virtually every substantive ground ― sends the wrong message about the Republic's tolerance for corruption and impairs the country's objective to be viewed as a fair and responsible market for foreign investment,” the statement reads.

Elliott stressed that the Korean government's challenge to the award payment granted by the international tribunal last month is aimed at distracting from the damages borne by the domestic and foreign shareholders of Samsung C&T.

In 2015 when Elliott held a 7.23 percent stake in Samsung C&T, it opposed a controversial merger of two Samsung Group affiliates, Samsung C&T and Cheil Industries, arguing that the deal damages shareholder interests by unfairly undervaluing Samsung C&T shares to benefit “only a few powerful individuals.” The merger was widely seen as aimed at solidifying Samsung Group heir Lee Jae-yong's grip over the conglomerate.

“Further, many Koreans, including institutional investors and pensioners, were damaged by Samsung and the prior administration's actions. Had Elliott not been illegally obstructed by the corrupt conduct at the heart of this case, these Korean institutions and pensioners all would have benefited significantly,” the statement reads.

“This challenge to the Award seems once again designed to use opposition to Elliott to distract from the damage done to Korean shareholders, domestic and foreign, by Samsung and the ROK, who together treated them as pawns to be sacrificed in a scheme to benefit only a few powerful individuals.”

Justice Minister Han Dong-hoon announced Tuesday that the Korean government has filed an appeal in a court in London against last month's ruling by the international arbitration tribunal located in the Netherlands, which ordered it to pay approximately $108.5 million ― including damages, interest, legal fees and other costs ― to the U.S. hedge fund company.

The government said that the PCA did not have jurisdiction to make the ruling under the Korea-U.S. Free Trade Agreement, along with raising other points of legal contention.