A group of opposition lawmakers is seeking to strengthen the screening of speculative foreign investment to protect the management rights of local firm owners and executives.
Rep. Park Young-sun of the main opposition New Politics Alliance for Democracy and nine other party lawmakers presented the bill last Friday to revise the Foreign Investment Promotion Act to authorize a government board to bar foreign investors from buying and selling companies here if the transaction is deemed speculative.
The draft law comes as South Korean corporate giant Samsung Group is involved in a lawsuit with Elliot, a U.S.-based hedge fund, over the merger of two of the conglomerate’s affiliates. Elliot owns 7.1 percent of Samsung C&T, which the group plans to merge with Cheil Industries. Elliot objects to the merger.
Rep. Park Young-sun, former floor leader and former acting chair of the main opposition New Politics Alliance for Democracy. (Yonhap)
The bill’s submission to the legislature also comes amid a multibillion-dollar lawsuit involving the South Korean government and Lone Star, a U.S. private equity firm, over the fund’s purchase and sales of Korea Exchange Bank, a Korean bank.
Lone Star asserts Seoul owes it $4.68 billion as officials here had levied unfair taxes and barred the fund from selling its KEB shares at the optimal time. KEB union members, on the other hand, have said Lone Star’s purchase of the company led to unfair layoffs.
“The new bill will prohibit the selling of Korean companies if the sale is considered detrimental to the overall Korean economy,” Park said in a press release.
Park’s bill will aim to strengthen Seoul’s say over such sales in the future.
“The U.S. and Japan have similar corporate laws,” Park added.
“Japan authorizes state interference in sales of (Japanese firms) if they are considered ‘detrimental to the overall Japanese economy.’ The U.S. government runs the Committee on Foreign Investment in the United States.”
“We must set up similar laws curbing foreign investment if the investors could affect the welfare of the entire Korean economy,” Park said.
The new bill will come into effect six months after receiving approval from the legislature and the Cabinet, if at all.
Park is a third-term lawmaker and the former floor leader and acting chair of the NPAD -- the second-most dominant party in Seoul’s 298-seat unicameral parliament with 130 seats.
By Jeong Hunny (hj257@heraldcorp.com)
