S. Korea's sovereign fund considers canceling contract with U.S. fund Elliott

Lim Chang-won Reporter Posted : 2018-05-17 16:50 Updated : 2018-05-17 16:50
글씨작게 글씨크게

[Iclickart]


SEOUL -- The head of South Korea's sovereign wealth fund said Thursday he would consider canceling a contract with U.S. activist hedge fund Elliott Management, which has been involved in a legal dispute with the Seoul government over the 2015 merger of two Samsung units.

Korea Investment Corporation (KIC) chairman Choi Hee-nam said he has been closely monitoring the dispute. Under a hedge fund program, Elliott manages a $50 million KIC fund. Choi said there were "conflicts of interest" because the Seoul government is the sponsor of KIC which manages $134 billion in assets at the end of 2017.

Elliott seeks more than $670 million in compensation for losses caused by what it called unlawful government intervention in 2015 when the hedge fund launched a proxy vote war to prevent the merger of Samsung C&T and Cheil Industries.

Samsung narrowly won the battle to complete the merger, helped by support from the National Pension Service (NPS). However, Samsung Electronics Vice Chairman Jay Y. Lee was arrested in February last year for his role in a corruption scandal involving South Korea's ousted ex-president Park Geun-hye.

Lee was released in February this year after an appeals court handed down a suspended jail sentence. Park and her aides were accused of pressuring the state fund to support Samsung in return for favors. Elliott argued the state fund's action and government intervention unfairly damaged shareholders in breach of a free trade agreement between Seoul and Washington.

In November last year, the Seoul High Court upheld the sentence of two and half years in prison for Moon Hyung-pyo, a former health and welfare minister, for pressuring the state fund to approve the merger.