William Overholt Explains How He Protected Korea’s Most Popular Opposition Leader
By William H. Overholt
After the Kwangju incident in 1980, my employer, Bankers Trust, sent me to Korea to evaluate the situation. I reported back, as I had in the past that South Korea was strong and resilient and that Kim Dae Jung’s media reputation as a leftist radical was entirely unfounded. I said that his economic views were quite sensible and that his political position, while strongly opposed to the dictatorship, was actually far more conservative than that of Park Chung Hee. In fact, Kim Dae Jung represented the old landlord and Christian elite against the egalitarian challenge of Park’s radical reforms.
After Kim Dae Jung was sentenced to death, the Korean government sent a mission to explain the situation and to seek badly needed loans. At the time Bankers Trust was a major force in the syndicated loan market and a major provider of funds to Korea. I briefed my boss—David Sias—particularly vehemently about Kim’s positions but recommended that he handle the visitor (who had been promoted the day before from head of Bank of Korea to Minister of Finance) quite diplomatically. The new Minister of Finance explained that Kim Dae Jung was a Communist and that therefore it was necessary to execute him.
David Sias did not react diplomatically at all. He said, “Bill Overholt has briefed me about Kim Dae Jung’s background. What you have said is complete nonsense. Don’t even consider coming to market in New York until we’ve stopped hearing such nonsense for at least 90 days.”
Weeks later, another mission came, in an effort to achieve a better result. This mission consisted of Kim Kyung-won, then a top official in Blue House, and Kim Sejin, a relatively young foreign ministry official who was serving on Chun’s national security council. Sejin was my best Korean friend. Kim Kyung Won, also a friend, had to attend another meeting, so Kim Sejin came to Bankers Trust alone. He was a very scholarly, forward-looking official, and he knew my views on Korea, so he didn’t attempt to sell the line about Kim Dae Jung being a communist. The meeting was cordial but inconclusive in terms of any loan.
Afterward, Sejin and I went to my office. Together we drafted a letter from me to him, explaining that the New York financial markets were very fearful that the execution of Korea’s most popular opposition leader would lead to political chaos and make it impossible for Korea to repay its foreign debts. Under the circumstances, my letter said, there would be very little money forthcoming for Korea. Appended numbers showed that this would create a severe financial crisis within a year. Unstated was the obvious implication that a national financial crisis would probably destabilize President Chun Doo Hwan’s somewhat shaky rule.
Kim Sejin returned to Seoul, translated the letter, and requested an appointment with Chun Doo Hwan. He gave Chun a briefing on the letter, concluding that the country’s financial solvency was at stake because of the threat to execute Kim Dae Jung. Both of us were terrified about what Chun’s response would be. At worst, Kim Sejin might end up in jail and I might end up without a job.
Instead, Chun took the letter to be valuable information and promoted Kim Sejin several grades immediately. Because of Sejin’s special insights into the New York banking market, he appointed Sejin Consul General in New York and in addition designated him informally as the president’s special representative in the United States, using him to circumvent technically higher ranking officials. Sejin immediately flew to the U.S. and visited Bankers Trust. He conveyed Chun’s personal promise that Kim Dae Jung would not be executed, although he explained that it would take some months before the changed decision could be formally announced. On that basis, he urgently requested that we raise a syndicated loan in order to avoid the financial crisis we had predicted. David Sias approved the deal, and we privately explained the situation to other New York banks, raising a large syndicated loan.
Before announcing the decision about Kim Dae Jung, Sejin oversaw negotiations with the Reagan administration, mainly in the person of National Security Advisor Richard Allen, to make Chun Doo Hwan the first foreign leader to visit Reagan in return for a promise not to execute Kim Dae Jung. In effect, Chun bartered Kim Dae Jung’s life twice, once for funding and once for prestige, and thereby stabilized his administration.
Kim Sejin was later promoted to Vice Minister of Commerce and Industry but shortly thereafter died of pancreatic cancer.
William H. Overholt is a research fellow at the Ash Center