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Pitfalls on Korea's path to liberalization

It is difficult to tell what is going on in South Korea at the best of times. The government speaks the language of reform and even harbours regional financial ambitions but its actions often appear to contradict its public statements. Recent events surrounding distillery Jinro's restructuring are no exception. Chris Leahy reports.

"If a foreigner makes 'too much' money
from a deal the government gets accused
of selling off the national jewels"

ANYONE WHO HAS visited South Korea knows that the Koreans are partial to a drink or two. The poison of choice is soju, a strong liquor distilled from rice, tapioca or sweet potatoes. Koreans drink a lot of soju, which is why dominant distillery Jinro Ltd enjoys revenues of some $200 million. It is also why there was an outcry against a national "treasure" being brought to its knees by a foreign "vulture fund" when the company was forced into receivership by chief creditor Goldman Sachs in 2003. Jinro was recently put on the block as part of the restructuring for creditors. The asset attracted enormous interest from domestic and international buyers. This time, however, a Korean party was the winner, with Merrill Lynch announcing in March that a consortium led by brewery Hite had won the right to proceed to due diligence with a bid rumoured to be W3.2 trillion ($3.1 billion).

Ominously for some, the two other preferred bidders were also all-Korean consortia, raising the cry from certain foreign parties that this was all a Korean nationalistic plot to see off foreign participation in a prized Korean asset.

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