Kim Geon-hee Arrested.

• The court issued an arrest warrant. Jeong Jae-wook (Seoul Central District Court warrant judge) stated there is a risk of evidence tampering.
• After the warrant review, Kim Geon-hee, who was waiting at Seoul Southern Detention Center, will be moved to the detention ward.
• She is under special investigation for 16 charges.
• This is the first time a former presidential couple has been arrested simultaneously.
• The JoongAng Ilbo editorial called it “devastating.” The Seoul Shinmun said it was “shameful and more shameful.” The Chosun Ilbo described it as “shocking bribery” and stressed that “Yoon Seok-yeol and his wife must make a public apology.”
• The Hankook Ilbo analyzed that “the notion that Kim Geon-hee was behind all the ‘incomprehensible events’ during the Yoon Seok-yeol administration is gaining more credibility.”
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What Matters Now.

“Yes, I Gave Kim Kun-hee a Necklace,” Confesses Seohee Construction.

• The fake necklace found at Kim Kun-hee’s brother-in-law’s house was likely planted to mislead the special investigation.
• The special investigation team traced the necklace purchase records and raided Seohee Construction. The day after the raid, Lee Bong-gwan (Chairman of Seohee Construction) admitted to giving the necklace to Kim Kun-hee. He also submitted the necklace he got back from Kim to the investigators.
• According to the JoongAng Ilbo, Kim returned the necklace just before martial law was declared.
• Lee Bong-gwan also admitted to asking if his son-in-law could get a position in the Yoon administration. Indeed, Lee’s son-in-law, Park Sung-geun (then a lawyer at Barun Law LLC), was appointed Chief Secretary to the Prime Minister three months after handing over the necklace.
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Did She Intentionally Drop the Fake Necklace?

• At the 2022 NATO meeting, the necklace worn was revealed to be a Van Cleef & Arpels piece worth 62.2 million won, sparking controversy. It wasn’t listed in the public official’s asset report.
• Initially claimed it was “borrowed locally,” then changed to “borrowed from an acquaintance.”
• When the special investigation began, the story changed again to “it was a fake.” Claimed it was bought in Hong Kong for 2 million won as a gift for her mother, but the idea of the First Lady wearing a fake necklace to a diplomatic event was implausible from the start.
• Kim Keon-hee’s legal team argued it was “evidence of a separate crime,” stating that addressing content not in the warrant application severely infringed on the right to defense and legal assistance.

Seohee Construction and Yangjae-dong Camp.

• Yangjae-dong Camp was Yoon Seok-yeol’s unofficial campaign organization during the 2022 presidential election.
• Jeon Seong-bae (Geonjin Beopsa) led the Yangjae-dong Camp. The camp office was located in the Seohee Construction building, sparking controversy.
• Kim Geon-hee invited Lee Bong-gwan and his three daughters to Yoon Seok-yeol’s inauguration.
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Where Did the Watch Go?

• Kim Kun-hee’s brother-in-law’s house revealed a watch box and certificate. It’s a Vacheron Constantin ‘Historiques American 1921’ model, originally priced at 54 million won, bought for 35.23 million won. The context at the time was as follows.
• Right after the 2022 presidential election, the head of a company that supplied robot dogs to the presidential office met Kim Kun-hee. Kim said, “I like that watch,” and “I need something like that.” The representative said, “The First Lady should wear a classic,” and “I can get it cheap as a VIP,” connecting the store with Kim.
• The store was told it was for a gift, and after confirming her status as the president’s wife, it was purchased at a VIP discount. It’s claimed that since it was bought with money given by Kim, it wasn’t a bribe, but this needs verification.
• This businessman has been acquainted with Yoon since his time as Prosecutor General and also recommended a Van Cleef & Arpels necklace to Kim Kun-hee.
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3 Billion Won in Kim Beom-soo’s Account: The Smoking Gun.

• A recording was obtained where Kim Geon-hee said she “put in 3 billion won,” but it turned out the account was under the name of Kim Beom-soo (former SBS announcer).
• In a call with a Mirae Asset Securities employee, she said, “I put 3 billion won into that account. It’s under a borrowed name, so be aware.”
• At the time, Kim Beom-soo was a director at Covana Contents. Kim Geon-hee deposited the 3 billion won in August 2011, and over the next three months, the account made a profit of 32 million won from Deutsche Motors transactions.
• There is speculation that Kim Beom-soo’s testimony played a decisive role in Kim Geon-hee’s arrest.
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“Upset About Pre-Marriage Issues”.

• Kim Keon-hee said this in her final statement.
• She was likely referring to the Deutsche Motors stock manipulation allegations, but the essence of this case is that the investigation was not conducted because she was the wife of the Prosecutor General, and after the election, the President’s wife.
• So, this issue is not about pre-marriage matters but about Yoon Seok-yeol.
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Kim Keon-hee’s Aide Arrested at Airport.

• Kim Ye-seong told a Dong-A Ilbo reporter, “I don’t understand why Yoon Seok-yeol didn’t pursue a special investigation into Kim Keon-hee during his term.”
• The investment of 18.4 billion won by Kakao Mobility and HS Hyosung in IMS Mobility, where Kim Ye-seong was a major shareholder, is also suspicious. It’s called the so-called Aide Gate. There are allegations that 4.6 billion won flowed to Kim Keon-hee.
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Deep Dive.

Today’s National Policy Planning Report.

• Out of 123 national policy tasks, the top priority is constitutional reform for power decentralization.
• There is also a goal to reduce industrial accident fatalities from 0.39 per 10,000 people to the OECD average of 0.29.
• Plans to increase child allowances from 2.15 million children under 9 to 3.44 million under 13 by 2030 are included.

Kim Oh-rang, State Compensation Ruling After 46 Years.

• Fell in battle against the new military regime during the 12.12 coup.
• A ruling has been made to pay 300 million won in a damages lawsuit filed by the family of Kim Oh-rang (Lieutenant Colonel).
• Yoo Chang-hoon (Seoul Central District Court Chief Judge) stated, “There is a need to honor the noble sacrifice of Kim Oh-rang, who died resisting the illegal acts of the coup forces that violated constitutional order.”

Another Take.

All Problems Stem from Abolishing the Financial Investment Tax.

• First, it’s not Jin Sung-joon (Democratic Party lawmaker) who caused the stock prices to drop. We must not overlook that the Financial Investment Income Tax (Financial Investment Tax) was proposed and then abolished under the Democratic Party’s lead. The innocent securities transaction tax was raised, and attempts to tighten major shareholder requirements for stock transfer tax faced backlash.
• Lee Sang-min (Research Fellow at the National Budget Research Institute) views the controversy over major shareholder requirements as incitement.
• “When 5 billion became 1 billion, the stock market didn’t worsen, and when 1 billion became 5 billion, it didn’t improve. If the market worsened only when 5 billion reverted to 1 billion this time, it should be seen as a psychological issue, not a systemic one.”
• Korean companies don’t refrain from dividends because of high taxes but because they think all the money is theirs if they just hold onto it. Resolving the ownership-control gap is said to increase dividends. In this regard, Jin Sung-joon is right.
• The Yoon Seok-yeol administration squandered a whopping 80 trillion won in tax revenue. The Lee Jae-myung administration managed to save only 35 trillion won, leaving the cup half full. With many ambitions, the Lee Jae-myung administration must first secure more tax revenue.
• Lee Sang-min believes “all problems stem from abolishing the Financial Investment Tax.” No one likes taxes, but trying to cover for the absence of the Financial Investment Tax with other measures has led to bigger issues. When things get tangled, it’s best to cut through like the Gordian knot and stick to principles. The Lee Jae-myung administration must now admit that abolishing the Financial Investment Tax was a blunder.
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Call Them Controlling Shareholders, Not Major Shareholders.

• Change the frame, change the perception; change the perception, change the system and behavior.
• Lee Yong-woo (former Democratic Party lawmaker) pointed out, “We should call them controlling shareholders, not major shareholders, and general shareholders instead of minor shareholders.” It’s about breaking the habit of calling controlling shareholders ‘owners.’
• Renaming outside directors as independent directors was also a significant shift.
• Lee criticized the arbitrary criteria for major shareholders in stock transfer tax. Using terms like ‘taxable shareholders’ or ‘taxation on controlling shareholders’ changes the approach. Instead of setting the major shareholder threshold at 1 billion or 5 billion won, we should explore taxing actual controlling shareholders.

US-Korea Summit on the 25th.

• The modernization of the alliance is a key issue. The U.S. may bring up security demands like relocating U.S. forces in Korea and increasing cost-sharing. Min Jeong-hoon (Professor at the Korea National Diplomatic Academy) analyzed, “We might need to allow some flexibility for the stability of U.S. forces in the region.”
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What If US Forces in Korea Attack Taiwan?

• In Japan, this discussion actually took place. In March 2023, Michihiro Ishibashi (Constitutional Democratic Party lawmaker) asked Fumio Kishida (then Prime Minister) if Japan could say “yes” or “no” when US bases in Japan are used for military operations. Kishida replied that they would make an independent judgment from the perspective of protecting national interests.
• In 1960, Japan established a clause requiring prior consultation when US forces in Japan engage in combat operations.
• Yoon-hyung Gil (Hankyoreh editorial writer) emphasized that Korea should have similar safeguards. This is because if US forces in Korea intervene in the Taiwan situation, it cannot be ruled out that China might attack Korea.
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The Fix.

Farmers Target Korea Electric Power in Climate Lawsuit.

• Farmers are suing Korea Electric Power Corporation and others. Korea Electric Power and its five subsidiaries account for 28% of Korea’s carbon emissions. The strategy is to “hit one hard,” but a win could lead to more lawsuits against other companies.
• The farmers are claiming 2,035 won per person for mental damages. This reflects a demand to bring forward the coal phase-out promised by Lee Jae-myung’s government by five years, to 2040.
• Ma Yong-woon (farmer), who has been growing apples in Hamyang County, Gyeongnam for 15 years, says early blooming has significantly reduced yields.
• Hwang Sung-yeol (farmer), who has been growing rice in Dangjin, Chungnam for over 30 years, said, “The powerless farmers suffer the damage, while the companies responsible bear no accountability.” Hwang added, “If someone has to fight this battle, I am determined to be the first to stand in court.”
• According to Climate Solution, Korea’s cumulative emissions from 2011 to 2023 are 8.8 billion tons CO₂eq. The top 10 companies, including POSCO, five power subsidiaries, Hyundai Steel, POSCO International, Samsung Electronics, and Ssangyong C&E, account for 4.1 billion tons CO₂eq, or 48%.
• Farmers argue in their lawsuit that “for those harmed by climate change or who will be harmed in the future, claiming damages is practically the only remedy.” They stress, “If we don’t hold greenhouse gas emitters accountable for the massive damage caused by climate change, individual victims will have no protection.”
• The lawsuit holds three major implications.
• First, it seeks a social solution to compensate vulnerable groups like farmers and fishermen affected by the climate crisis.
• Second, it sends a message that the government must present a concrete roadmap to achieve national greenhouse gas reduction targets.
• Third, there’s a high likelihood that lawsuits will extend beyond public sectors like Korea Electric Power to private carbon-heavy companies like POSCO and Samsung Electronics.
• Cho Jeong-ho (Climate Solution researcher) emphasized, “If we include damages from heatwaves, heavy rains, floods, and wildfires, the loss scale will be even larger,” adding, “Korean companies and the government must proactively address greenhouse gas emissions and establish a practical reduction implementation system to fulfill their responsibilities.”
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Four-Day Workweek at Severance Hospital Cuts Resignation Rate.

• Nurse resignation rate dropped from 20% two years ago to 7%.
• Job satisfaction score increased from 56 to 60.
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ICYMI.

‘K-Pop Demon Hunters’ ‘Golden’ Tops Billboard.

• K-pop music has achieved this for the ninth time. The previous eight were songs by BTS and its members Jimin and Jungkook. It recorded 161.87 million streams on Spotify and 294.03 million views on YouTube. The singers for Lumi, Mira, and Joy are all Korean-American. They are Jae Lee, Audrey Nuna, and Rei Ami. Netflix animation ‘K-Pop Demon Hunters’ has surpassed 158 million views. It ranks first among Netflix animations and fourth among English films. Kim Kwang-ho (Kyunghyang Shinmun Editorial Writer) remarked, “It blends rich Korean elements like K-pop, shamanism, spirit, and folk art with the identity of immigrants living between two worlds and the power of global cultural capital.”
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“Awake?” KakaoTalk Messages Can Be Deleted Within 24 Hours.

• The time to delete sent messages extends from 5 minutes to 24 hours.
• It still shows “message deleted,” but now you can’t tell who deleted it.
• Of course, in one-on-one chats, you can’t hide the fact that a message was sent and then deleted.
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Jinro Outpaces Daesun Even in Busan.

• In the first half of the year, Hite Jinro and Daesun Brewery held market shares of 38% and 30%, respectively.
• There is an assessment that even Busan, the last stronghold of regional soju, has been breached.
• In 1976, the Park Chung-hee government introduced a mandatory local liquor purchase system, reducing soju brands from 250 to 11. Busan’s Daesun, Gyeongnam’s Muhak, Jeonnam’s Bohae, Daegu’s Kumbokju, and Daejeon’s Seon Yang are holding on, but Jinro has conquered the nation.
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Jung Eun-kyeong’s War.

• Youths who smoke, 1 in 3 (32%) start with e-cigarettes.
• Jung Eun-kyeong (Minister of Health and Welfare) declared war on synthetic nicotine.
• Synthetic nicotine isn’t classified as tobacco, so it isn’t taxed. Missing out on 1 trillion won in taxes annually.
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Toyota’s U.S. Factory.

• In the U.S., Toyota’s production share is 52%, while Honda and Nissan are at 80% and 64%, respectively.
• Hyundai from Korea stands at 43%. Thanks to the Korea-U.S. FTA, there was little incentive for Korea to manufacture cars in the U.S.
• Now, with tariffs rising from 0% to 15%, Korean cars are at a relative disadvantage. (For Japan, it increased from 2.5% to 15%.)

US-China Tariff Talks Delayed by 90 Days.

• There is a possibility of a decisive meeting at the APEC summit in Gyeongju at the end of October.
• Of the tariff rate that was raised to 115 percentage points last April, 91% has been canceled, and the application of 24 percentage points has been deferred for 90 days. With another 90-day deferral, the US and China will maintain tariffs of 30% and 10%, respectively, until November.

Why Korean Batteries Are Falling Behind.

• It’s because they failed to predict technological changes. They bet on the NCM (nickel-cobalt-manganese) method, but China’s LFP (lithium iron phosphate) batteries, once mocked for being cheap and unstable, have taken over the market. Korea underestimated China.
• Korea’s market share in the secondary battery sector dropped from 22% last year to 16% in the first half of this year. LG Energy Solution, SK On, and Samsung SDI hold 9%, 4%, and 3% respectively.
• China’s CATL holds 38%, and BYD 18%.
• Manufacturing still accounts for 24% of Korea’s GDP. This is higher than Japan (19%) or Germany (19%). Choi Joon-young (Specialist at Yulchon) emphasized, “We must revive manufacturing not with vague pessimism, but with cold judgment and systematic support.”
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Worth Reading.

Realignment and the Democratic Party’s 20-Year Rule Theory.

• Chun Kwan-yul (former SisaIN journalist) believes that a political realignment occurred in Korea during Park Geun-hye’s impeachment in 2016. This refers to unfamiliar voter blocs merging with existing party alignments. Right after the 2020 general election, he suggested that “progressives might finally have become the majority.”
• Ko Jeong-ae (JoongAng Sunday Editor-in-Chief) analyzed Lee Jae-myung’s government’s special pardons, stating it was because “the structure can withstand backlash.” They have secured 190 seats with friendly forces, and the general election is three years away. The pathetic People Power Party can be ignored.
• Ko believes the realignment is complete because there was a time when the People Power Party held over 30 seats in Yeongnam, but now the Democratic Party holds over 80 seats in the Seoul metropolitan area. The 4050 generation, overwhelmingly supportive of the Democratic Party, has become the largest voter bloc and will continue to be so for a while.
• Ko analyzed that “Lee Hae-chan’s (former Prime Minister) theory of the Democratic Party’s 20-year rule is becoming a reality.”
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Jeong Cheong-rae’s Victory and Party Member Sovereignty.

• Jeong Cheong-rae’s (Democratic Party Leader) election is a triumph of grassroots member centralism.
• Park Myung-ho (Professor at Dongguk University) analyzed, “It signifies an evolution from cadre parties, mass parties, inclusive parties, and cartel parties to personalized parties and platform network parties based on fandom.”
• Positives and negatives intersect. It could veer into populist fandom politics or lead to a generational shift in political forces beyond the two-party system.
• Park Myung-ho emphasized, “We must find the balance point of hybrid democracy.”
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Complex Puzzle of Stock Prices and Economic Growth.

• There were times when the KOSPI market cap moved faster than economic growth rates. Lee Chang-min (Professor at Hanyang University) analyzed, “Since the 1990s, the increase in market cap has largely benefited from external factors favorable to listed large corporations, such as corporate tax cuts and interest rate declines.”
• The story goes that “it was not the competitiveness of listed companies but the external environment that boosted profit margins, and a significant portion of those margins was returned to shareholders.”
• Lee Chang-min emphasized, “The development of the stock market leading to economic growth is not an ‘inevitable result’ but a ‘complex puzzle.’”
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Is the Stock Index Heading for 5000?

• Ko Hyun-gon (Editor of JoongAng Ilbo) summarized the issues into three points.
• First, broadening the scope of stock transfer tax is a major direction and principle. It’s a matter of tax fairness.
• Second, raising the securities transaction tax is a follow-up measure after the abolition of the financial investment tax. It’s a restoration, not an increase.
• Third, separate taxation on dividend income is a tax cut for the wealthy and a privilege.
• Ko Hyun-gon pointed out, “Once you start giving in, you’ll be dragged along for the entire administration,” adding, “If there’s a will to upgrade the stock market to a developed country framework, the reform plan must be pushed through.”
• Ko Hyun-gon also noted, “Individual investors should stop pretending to be weak.”
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Why Yoon Seok-yeol Plays the Conscience Prisoner.

• Because he sees no benefit in being dragged into a special investigation. Even pro-Yoon figures like Yoon Sang-hyun (People Power Party lawmaker) have turned away, and Kim Tae-hyo (former Deputy Director of National Security) and Cho Tae-yong (former Director of National Intelligence Service) have already spilled the beans.
• Lee Chun-jae (Hankyoreh editorial writer) analyzed, “What Yoon Seok-yeol is aiming for now is the ‘politicization’ of the treason trial.” The idea is to tarnish the trial since there’s no chance of winning anyway.
• Kim Young-il (then Seoul Central District Court judge), who handled the Chun Doo-hwan and Roh Tae-woo treason cases, issued an arrest warrant on his own authority when the six-month detention period expired. Kim Se-yoon (then Seoul Central District Court judge), who presided over Park Geun-hye’s trial, pushed for four-day-a-week hearings. Lee Chun-jae emphasized, “That’s how the judiciary’s credibility is maintained.”
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“A Fight We’ve Always Lost”.

• “No matter how much we crawl, scream, and fight, the state that firmly surrounded me and my comrades never once listened to the stories of those who were robbed, wronged, or displaced.”
• This is from a piece by Moon Jeong-hyeon (Priest). Born in 1940, the elderly man is staging a tent protest against the Saemangeum New Airport.
• The risk of bird strikes at Saemangeum New Airport is 610 times greater than at Muan International Airport. There’s also suspicion that it’s an attempt to expand the U.S. Air Force base at nearby Gunsan Airport.
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