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Cooperative Companies

·  Introduction







Market Booster By Henry M. Seggerman


10/28, 2003 09:59


When you get right down to it, investors’ concerns, whether here or anywhere else the world, are pretty simple.  We don’t pay attention to most political squabbling.  If anything, we worry that many lawmakers seem to get in the way of economic growth.  Ideally, we’d rather the politicians just kept their hands off the world of business most of the time.  We want less regulation, less controls, more free enterprise, more globalization, more companies with good business plans simply allowed to grow and prosper.  We need a reasonable bank policy, and we need  a court system which expedites bankruptcies, and on that also lets investors who have lost money as a result of fraud collect significant financial damages from company Directors who have violated their fiduciary duties.  We need strong companies, run by strong shareholders, and that includes us.


Gordon Gecko preached “Greed is good,” and undeniably there are plenty of company executives whose main goal in life is to amass huge fortunes for themselves.  If they are working for a company with a good business plan and good corporate governance, they can still amass a fortune, but this should only happen when the company is profitable – especially in any rich executives’ divisions.  Good for them, their company is booming, it’s driving the economy, and they’re getting rich personally.  No harm in that.  They earned it.


In politics, the opposite holds true.  Nobody ever got elected anyplace on Earth with a campaign promise to boost politician salaries.  Given the amounts of taxpayer money lawmakers control, politicians’ take-home pay is, quite honestly, lousy.  Even if you work a financial miracle, you don’t get a raise; at best, you just get re-elected (and not even that for the President of Korea!).  That’s why people like Michael Bloomberg, Arnold Schwarzenegger, Ross Perot, and Thaksin Shinawatra are drawn to politics: precisely because they don’t need the money.  Serving their countries is the same thing for them as attending a charity ball.  They just want to make a philanthropic donation.


However, most politicians around the world are not billionaires like Bloomberg and Perot.  Most of them don’t even have much money saved up.  Some of them, including the current resident of 1600 Pennsylvania Avenue, are actually business failures.  So, when these poorly-paid political salarymen look at all the Gordon Geckos tooling around New York or Seoul in their Ferraris, their reaction is quite normal: jealousy.  After all, businessmen raking in millions didn’t even get elected.  That’s where temptation comes in.


Political graft has been the norm worldwide since the first agora in Ancient Greece.  The U.S. provides the best example of many things, and graft is no exception.  In the U.S., the vast majority of the population desperately want to strictly control, or impose an outright ban on, firearms, because of the horrendous pattern of schoolyard massacres and killing of loved ones in America.  However, this will never happen.  Why?  Political bribes and extortion.  In the U.S., billions and billions of taxpayer dollars are spent giving foreign aid to select countries without any taxpayer approval whatsoever.  Why?  Political bribes and extortion.  The procedures used of course are euphemized with a lot of fancy words like “soft money” and “special interest” groups, but nobody’s fooling anybody with that.  And anyone who thinks there was no quid pro quo for Clinton’s slick end-term pardon of notorious fugitive money-launderer Mark Rich is incredibly naïve.  Just check the return address: Zug, Switzerland.


For decades and decades, throughout much of Asia, Africa, Latin America, and Eastern Europe, American euphemisms for graft were not necessary.  If you ran the place, you just looted the state bank anytime you felt like it.  Consequently, these countries were viewed as cesspools of graft, but only because they hadn’t developed the sophisticated American euphemism system.  One by one, we are seeing the Marcoses, the Sukarnos, the P.R.I.s, and the rest of their oily herd, go extinct like dinosaurs.  As a follow-up to this era, it is interesting to witness the election of quite a few women presidents in sexist, misogynist, patriarchal Asian countries like Pakistan, India, Indonesia, Bangladesh and the Philippines.  One suspects that this is because it is no longer possible for testosterone-fueled, Marcos/Sukarno style, national bank looting, and that being president is seen as just too much work, for too little pay.


In context of the illustrious history of worldwide political graft, President Roh’s proposed referendum, as a response to Choi Do-sul’s summons, seems overkill in the extreme.  Mr. Choi hasn’t even been convicted yet; in fact, he is pleading his innocence.  Furthermore, prosecutors have cast a pretty big net, issuing summonses across the political spectrum, from the MDP’s Choi, to the GNP’s Choi Don-woong, to the NPPC’s Lee Sang-soo.  Does this mean that if Roh hypothetically were to lose the referendum, then no GNP candidate could succeed him, because the GNP may possibly have taken money from SK, too?  The whole gambit makes no sense, and has a “Checkers” tone.


And even if they manage to find Choi Do-sul’s “smoking gun,” is there any real new news in this business?  After all, wasn’t Kim Hong-up sentenced to 3.5 years in prison, and his little brother 2 years (suspended)?  And didn’t 450 officials get a “hot tip” about Korea Digital Line on January 27, 2000, and rake in 400% gains three weeks later?  And, gee whiz, how do you hang yourself from a towel rack, anyway (as Chang Rae-chan reportedly did)?  What about “furgate,” Lee Yong-ho-gate, Shin Kwang-ok-gate, Song Ja-gate, Park Jie Won-gate, Lee Suk-chae-gate, etc., etc., etc.  You didn’t see D.J. Kim falling on his sword and calling for a referendum when any of these scandals erupted.  In some instances, he did not even bother to make a comment.  One had the distinct impression that D.J.’s crusade to dismantle the chaebols provoked a series of vindictive muckraking revelations by the chaebol-controlled press and the chaebol-controlled opposition party, and that D.J. just brushed all this off, like annoying mosquitoes.  At most, he issued an apology, and went back to work.  After all, he survived arrest, imprisonment, attempted assassination.  What’s a little character assassination, compared to that?


Henry M. Seggerman is President of International Investment Advisers, an investment management company which has focused exclusively on the Korean market for eleven years, registered with the Financial Supervisory Service for Korean clients and with the Securities and Exchange Commission for U.S. clients.  As of October 20, 2003, this year its Korea International Investment Fund is the top-performing Korea equity fund amongst 65 which are tracked by Bloomberg.  The fund has a five-year annualized return of 25% and in its lifetime has outperformed the KOSPI (in US$ terms) by 207%...

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