South Korea has been ordered to pay Elliott Investment Management $53.6 million in damages to the US activist investor because of a previous administration’s intervention in the 2015 merger of two Samsung affiliates.
(Bloomberg) — South Korea has been ordered to pay Elliott Investment Management $53.6 million in damages to the US activist investor because of a previous administration’s intervention in the 2015 merger of two Samsung affiliates.
South Korea’s justice ministry announced the decision in a statement Tuesday, citing a ruling by the Permanent Court of Arbitration. Arbitrators accepted about 7% of Elliott’s $770 million in claims, it said.
The ruling would cost the country a total of 130 billion won ($102 million) including damages, interest and legal fees.
Elliott is reviewing the award “closely,” the investor said in a Tuesday statement.
“The decision shows the harm done to investors, both foreign investors and domestic Korean pension holders, by corrupt relationships between government officials and chaebol,” Elliott said referring to family-controlled conglomerates in Korea.
“We hope the Republic will follow the directions of the Tribunal and pay the ultimate award rather than pursue baseless legal proceedings to challenge the Tribunal’s decision,” the statement said.
Cheil Merger
The tussle between Elliott and South Korea dates back to 2015, when the activist investor lost a proxy fight opposing a merger between Samsung C&T Corp. and Cheil Industries Inc. The tie-up was seen as a plan to boost Samsung heir Jay Y. Lee’s stake in a de-facto holding company of the conglomerate.
Samsung narrowly avoided defeat in the fight after gaining a critical swing vote from South Korea’s government-run National Pension Service. A corruption scandal later revealed the NPS sided with Samsung after pressure from the presidential office guided by then-president Park Geun-hye. Both Lee and Park were convicted of bribery charges but granted special pardons.
Elliott submitted the dispute for arbitration in 2018 and urged the South Korean government to pay it at least $770 million. The activist, which had about a 7% stake in C&T in 2015, argued it would have seen greater gains on its investment without South Korea’s intervention. South Korea rejected this claim, saying Elliott was able to profit from its position via hedging transactions.
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–With assistance from Crystal Tse.
(Updates with Elliott statement in third paragraph.)
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