Scion of the Times

Sae Hyun Uhm went to great extremes to distance himself from his prescribed destiny.

A 30-year-old heir to a South Korean construction empire, Uhm moved from Seoul to Los Angeles, traded away his family’s Buddhist beliefs for Christianity, married a Korean American classmate and established his own company with a couple of college friends.

Earlier this year, Uhm’s bid for independence was right on track. His Los Angeles-based development firm, K. Young Inc., had high-stakes commercial and residential projects underway in Southern California, Nevada and Hawaii.

But the soft-spoken entrepreneur has since discovered he did not move far enough to escape the turmoil of his homeland: His father’s $2-billion construction empire is crumbling, and threatens to take Uhm’s fledgling endeavor down with it.

So it is that the political scandals of South Korea--which disgraced two former presidents and indirectly tainted Uhm’s well-connected father--have undermined plans for an office complex near the Ventura Freeway in Glendale.

The tale of two generations of an ambitious Korean family concretely illustrates the powerful personal and economic ties that increasingly span the Pacific, linking the destinies of East and West as never before.

And it is a drama with psychological implications for Southern California, where K. Young represents a new wave of Korean investment and has been among a handful of aggressive developers demonstrating confidence in the recession-battered real estate market.

“I’ve been wanting to go back to Korea to help him, but my father felt it would be unnecessary,” said the younger Uhm, who remains confident that his U.S. subsidiary will survive the blood bath back home. “Right now, the best help I can give him is by doing things right here.”

When Uhm launched K. Young in 1989, he was a young, headstrong USC graduate with access to family money and a few big ideas, which he put into a 12-page letter to his father, Sang Ho Uhm, in Seoul.

In that emotion-charged correspondence, part confessional, part business plan, Uhm outlined his reasons for coming to the United States, his religious conversion and, most important, his desire to take advantage of the expanding markets in Asia, particularly China. He was convinced he could accomplish that more quickly from America, where companies are freer to act.

His father, a devout Buddhist, opposed the idea of expanding the family business outside Korea. But, in his son, the first of three children, he could see reflected his own ambitions two decades earlier, when he left the family’s home in Taegu, a city in southeastern Korea, and moved to Seoul, against his father’s wishes.

So, in spite of his misgivings, Sang Ho Uhm agreed to support his son’s request for $500,000 to build a real estate and trading business that would be based in the United States and extend across the Pacific.

“Life repeats,” the elder Uhm said during an interview in his spacious, high-rise office in Seoul. “I wanted my own son to come and help me. Instead, he used the same logic I’d used against my father when I came to Seoul.”

Armed with his father’s seed money, Sae Hyun Uhm put his plan in motion. His first real estate project was a joint venture with Watt Homes in Scottsdale, Ariz. Since then, K. Young has developed or has in the works $440 million worth of office and residential projects, mostly on the West Coast.

They include the proposed $106-million Palladian World Tower in Glendale, the first speculative commercial project in Southern California in five years; Water Garden II in Santa Monica; the $46-million King Kalakaua Plaza, the biggest commercial development in Waikiki, Hawaii, in 15 years; and Regency Hills, a single-family housing project in Las Vegas.

As heir apparent to the family business, Sae Hyun Uhm was raised around the world of construction. As a child, he accompanied his father to building sites and eavesdropped on conversations when businessmen visited the family’s home.

But on unfamiliar U.S. turf, Uhm sought out experienced American managers and formed partnerships with established U.S. firms. He also adopted an American management style, appointing non-Koreans to top management positions, encouraging staff input at meetings, and even naming a woman to head the firm’s Honolulu office, against his father’s wishes.

Kyong Su Im, a Honolulu lawyer and past president of the Hawaii Korean Chamber of Commerce, said Uhm represents a new breed of Western-educated Korean business executive who is comfortable working both sides of the Pacific.

“He could play a major role as a bridge between Korean companies and investment in the U.S. because he has access to people and his success would, I think, teach a lot of Korean companies to follow his methods,” Im said.

K. Young is one of about 30 Korean construction firms--including Samsung, Daewoo, Dong Ah Construction, Doosan and Sungwon--that have entered the U.S. in recent years seeking new markets to offset sluggish sales back home.

While other Korean companies lay low, K. Young became known as a risk taker. Uhm bet that the Southern California economy was on the rebound, particularly the entertainment-industry-oriented communities of Glendale and Burbank. He gained a reputation for strategic bottom-fishing, entering real estate markets on the verge of a turnaround.

But back in South Korea, political scandal and other events crippled the country’s construction industry and forced Uhm’s father, founder of the $2-billion Kunyoung Group, to give up control of his construction firm--the centerpiece of the family business and the parent company of his son’s fledgling endeavor.

The collapse occurred as K. Young was seeking financing for its Glendale project. That eliminated the possibility of using the parent company’s assets to back the loans and cast a cloud over the future of the U.S. subsidiary. Construction of the Palladian project, which was to begin later this year, has been put on hold.

Uhm’s 2.4-acre Palladian site, which he purchased for $6 million in 1995, is a high-visibility property next to the Ventura Freeway and one of just a few large parcels of land available in Glendale, which has one of the lowest office vacancy rates in Los Angeles.

But competition remains fierce for the handful of potential tenants that drive that leasing market: Warner, Disney, Turner Broadcasting and DreamWorks SKG.

Robert Cavanaugh, a vice president with BT Securities Corp. in Los Angeles, doubts any lender would finance the Palladian project until a major tenant is secured and K. Young’s direction is clear.

With personal candor unusual in a business executive, Uhm relates how religion has helped him maneuver the minefields.

Shortly after moving to the United States, he suffered a serious bout of fatigue and homesickness. He began reading the Bible and decided that Christianity, not Buddhism, spoke to his soul.

The conversion became especially meaningful several months ago, when Uhm began buckling under stress. His father’s empire was in trouble. He was engaged in a personality clash with one of his managers, who eventually left the company. The negotiations with the potential tenant in the Glendale project had hit a snag. Instead of spending time with his wife and two young sons, he was fleeing to his television set at night.

Through daily prayer, the young Korean immigrant said, he found the strength to stay the course while his father’s vision crumbled around him. Bolstered by his religious convictions, Sae Hyun Uhm is confident his budding empire will survive the crisis back home.

Of course, it helps that his U.S. subsidiary has $47 million in assets and just $19 million in debt. Although K. Young is owned by the parent company, the primary development arm is owned by the younger Uhm.

In the same spirit that drove Uhm to Los Angeles in the 1980s, his father had moved to Seoul in the 1970s.

The elder Uhm was convinced that the future of his family’s small construction business was in the capital city, home for the masterminds of Korea’s postwar economic reconstruction. His timing was right.

One source of revenue was an ambitious program launched in 1987 by the Korean government to build 2 million apartments to house the nation’s expanding middle class.

Kunyoung got involved in some risky development ventures, including a housing project in Shanghai and a villa-style condominium project in a Seoul suburb designed to appeal to upscale buyers.

But Kunyoung’s downfall was more than just a few bad strategic decisions. Korean construction firms were hit by a slew of problems, including high land prices in Seoul, overbuilding in rural areas, a rise in interest rates that dampened home sales and tougher government scrutiny following last year’s tragic collapse of a Seoul department store.

Construction financing grew even more scarce after two major builders, Woo Song Construction and Yuwon Construction, went bankrupt. By the end of last year, Kunyoung Group--whose net worth is an estimated $2 billion--owed more than $1.4 billion, about half of which was tied to the construction arm of the company.

Under previous regimes, powerful political allies might step in and save a company from bankruptcy, according to Korean financial industry sources. That was particularly true in the heavily regulated construction industry.

But Korean President Kim Young Sam, launched a cleanup campaign that culminated in last month’s convictions of former presidents Chun Doo Hwan and Roh Tae Woo for their roles in the bloody military coup that put them in power.

Chun received a death sentence and Roh was sentenced to prison for 22 1/2 years. It is widely believed their sentences will be reduced or commuted by the president.

The court also seized a $631-million slush fund and sentenced the heads of some of Korea’s leading conglomerates--including Samsung and Daewoo--to prison for bribery. The executives have appealed.

Sang Ho Uhm, who vehemently denied paying bribes or receiving special favors from the Chun or Roh regimes, was not among those charged. But Kunyoung’s name still frequently surfaced in media reports as one of several companies that had profited from their connections to Chun and Roh.

Just being publicly linked to the two disgraced politicians dealt a blow to Kunyoung by scaring off Korean bankers fearful of alienating the current government, according to analysts in Seoul and Korean news reports.

Several Korean firms, including Cheil Jedang, a major investor in the new Hollywood entertainment company DreamWorks SKG, are talking to Seoul Bank about taking over Kunyoung, according to Ki Hoon Moon, chief analyst with SsangYong Investment & Securities Co. in Seoul. They are attracted by its lucrative asset base, which includes several valuable parcels of land and a 5% stake in Seoul Broadcasting, the country’s largest broadcaster.

Even as the corporate vultures hover over his failing company, the elder Uhm, who is a regular visitor to Seoul’s Buddhist temples and fortunetellers, remains confident his family’s luck has not run out. But Uhm, who starts his day at 4 a.m. with meditation and an hour of Chinese language study, long ago gave up hope that his son would come back to Korea.

“In his letter, he said when two strong kids come together, they will collide,” the elder Uhm recalled. “He said that would happen between us if he stayed. . . . It reminded me of my colliding with my father. If I had succumbed to his strong will, I would never have become a strong founder. So I must allow him to have his dream.”

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Excerpts from Sae Hyun Uhm’s 12-page letter to his parents, Sang Ho Uhm, dated Jan. 26, 1989:

Dear Mother and Father,

Both of you probably thought that I came to the U.S. because I was young and ignorant without any plans. But to tell you the truth, I had a plan of my own.

While I was preparing to enter a university in Korea, I strongly felt that it wasn’t going to help me in a practical way for my future in life because the curriculum and after-school study groups focused only on college entrance exams and nothing beyond that. So I wanted to break away from the mainstream and explore on my own in the U.S., depending on no one.

I could have just taken the easy way out like some of my friends in Korea by attending college, then graduate school, all under the protective layer of their family. But getting a secure job was not my ultimate goal.

Father, you probably think that I don’t smoke or drink just because I’m a Christian but it’s because I want to be a son you’re proud of. . . . Please accept me just as I am and I dare not tell you to be like me, but simply I want to tell you that, for me, God is alive.

Father, I have seen you with sweat on your forehead to get to where you are now, and I myself am not going to receive freely of what you’ve done. I want to work as hard as I can to receive my portion of the assets.

Also, Father, I believe I have, as your son, the same business mind that’s deep down embedded in me. Please help me to be independent and successful on my own.

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Chi Jung Nam of The Times’ Seoul bureau contributed to this report.