[AI Library] Chapter 11: The Defense Argument That Resurfaces Twenty Years Later
The Han Dong-hoon Story
Chapter 11: The Defense Argument That Resurfaces Twenty Years Later
Kim Kyung-jin
The Han Dong-hoon Story
PART 03 Lone Star, Han Dong-hoon Who Protected 6 Trillion Won of National Interest · Original Text 02
In November 2012, Lone Star filed a lawsuit against the South Korean government with the International Centre for Settlement of Investment Disputes (ICSID) under the World Bank.
The claim amount was 4.6795 billion dollars.
At the exchange rate at that time, it was over 6 trillion won.
The largest international lawsuit in Korean constitutional history. If the scale is difficult to grasp, think of it this way.
Six trillion won is enough to provide free meals to all elementary school students nationwide for ten years. It is a budget that could build an entirely new subway Line 2 in the Seoul metropolitan area.
Lone Star's logic was as follows.
"We intended to sell Korea First Bank to Hana Financial in 2012. But the South Korean government, watching public opinion, unreasonably delayed approval of the sale. As a result, we suffered enormous losses. The South Korean government must compensate us for those losses."
On the surface, it appeared to be a plausible argument.
In fact, at the time in Korean society, there was intense controversy over Lone Star's abandonment of responsibility after profiting. The government delayed approval of the sale, mindful of public opinion. Lone Star dug into precisely that point: after acquiring the bank at bargain prices and pocketing enormous profits, it was now attempting to extract additional trillions of won by claiming the sale approval was delayed.
This was the true face of speculative capital.
Bureaucrats were flustered. They hired law firms and drew up countermeasures, but lacked confidence. Defeatism began spreading through government offices. "Let's settle and reduce the amount" became the common refrain. International arbitration experts predicted that the South Korean government would have to pay substantial compensation. But the key to changing the course of this fight already existed.
It was the criminal guilty verdict that the young prosecutor Han Dong-hoon had obtained in 2011. International law contains a principle called the 'Clean Hands Doctrine,' which means those with dirty hands cannot seek the protection of the law. In other words, only the just can make just claims.
Lone Star had committed the crime of stock price manipulation. The Supreme Court of the Republic of Korea had confirmed it as guilty. Therefore, it could be argued that the South Korean government's delay in approving the sale was not unfair interference, but rather a legitimate response to the criminal investigation.
The logic was, "You cannot grant sales approval to a criminal, can you?" The single line from an email that Han Dong-hoon had discovered twenty years ago, "Capital reduction is off the table," had now returned as the defensive argument protecting 6 trillion won of taxpayer money.
Throughout his time as a prosecutor, Han Dong-hoon carried the records of this case like the 'burden of his life.' Each time he moved, he made sure to bring a truck-load of copies.
Regardless of his position at the Ministry of Justice or the Supreme Prosecutors' Office, he provided behind-the-scenes support for Lone Star ISDS response. Most civil servants who understood the lawsuit well had retired. He was nearly the only practicing official who remained and could see the full picture of this case from beginning to end.
In 2015, as head of the Fair Trade and Tax Investigation Division at the Seoul Central District Prosecutors' Office, Han Dong-hoon achieved outstanding results and earned the reputation of 'economic prosecutor of the year.' Some media outlets called him a 'viper,' meaning that once he bit, he did not let go.
In May 2022, Han Dong-hoon became Minister of Justice.
And in August that year, the decision from the first arbitration award was announced.
The arbitral tribunal rejected most of Lone Star's 6 trillion won claim. However, it ordered South Korea to pay approximately 216.5 million dollars (approximately 280 billion won) in compensation.
The majority opinion acknowledged Lone Star's stock price manipulation while partially accepting South Korea's responsibility for the delay in approval.
But the dissenting opinion differed.
It stated explicitly, "Because Lone Star engaged in stock price manipulation, South Korea's compensation liability is zero won." This was proof that the verdict of guilty for stock price manipulation that Han Dong-hoon had designed and proven held up on the international stage.
At this time, some quarters were steeped in defeatism.
"This is a satisfactory outcome." "An appeal would have no chance of success." "Interest accrues 100 million won daily, so it is better to pay quickly."
Such voices were dominant. In particular, the Democratic Party, then in opposition, was even more hardline. "You are offering false hope by pursuing a hopeless battle." "Minister Han Dong-hoon is dragging out the suit due to personal stubbornness." Some did not hesitate to launch cursed attacks, saying, "If we lose, Han Dong-hoon should pay out of his own pocket."
But Minister of Justice Han Dong-hoon thought differently. He said this: "Even if the probability of success was not 100 percent, it was a situation where the government had to work around the clock to make it 100 percent. How could I turn a blind eye to a criminal who engaged in stock price manipulation taking taxpayer money as precious as blood?"
He knew better than anyone the criminal facts about Lone Star that he himself had investigated and proven. Using the acknowledgment of Lone Star's stock price manipulation in the first award as a 'bridgehead,' he judged that there was ample chance of success if procedural illegality was exposed.
The single piece of evidence discovered twenty years earlier while working through the night had now become the final move to save South Korea.
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Kim Kyung-jin
Attorney · Former Member of the National Assembly · AI Policy Researcher
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