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U.S. Mason Capital sues gov’t for $175 million

July 04,2018
Mason Capital Management, a U.S. hedge fund, is seeking around $175 million in damages from the Korean government over a former administration’s role in a controversial merger between Samsung C&T and Cheil Industries, following in the footsteps of its peer Elliott Management.

The Ministry of Justice on Tuesday published a notice of intent sent by Mason that details the size of the damages the investor is claiming and its basis for taking the Korean government to the International Court of Arbitration.

A foreign investor can file a claim with the International Centre for the Settlement of Investment Disputes, an international arbitration body, three months after it sends a letter of notice to the respondent state’s justice ministry.

“As a result of Korea’s illegal actions, the Mason investors suffered damages on their Samsung Investments, in an amount to be quantified, and currently estimated to be no less than $175 million,” the notice said.

By illegal actions, the company refers to the former Park Geun-hye administration’s alleged intervention to force the National Pension Service, then the largest shareholder of Samsung C&T, to approve the merger despite some shareholders’ objection.

The hedge fund said that the Park government’s involvement breaches an article of the free trade agreement (FTA) between the United States and Korea.

“Mason asks Korea to attempt to find an amicable solution to the present dispute and will make its representatives available to engage in such a process at Korea’s convenience,” its legal representative said in the statement. “Mason, however, reserves its right to submit its claims to arbitration pursuant to Article 11.16 of the FTA if no amicable resolution is achieved within 90 days of receipt of this Notice.”

The move came after Elliott sent a similar notice in May, seeking $670 million in damages.

Both Elliott and Mason say that the merger devalued the price of Samsung’s construction unit and claimed that it was designed to strengthen the control of Samsung Vice President Lee Jae-yong over the group.

The 2015 deal surfaced during the massive influence-peddling scandal involving former President Park and her confidante Choi Soon-sil.

As for Elliott’s move, the Justice Ministry has said that the damage claim lacks grounds. Still, a series of court rulings indicate that the former administration unfairly influenced the National Pension Service to vote in favor of the merger.


BY PARK EUN-JEE [park.eunjee@joongang.co.kr]