Lee Min-hyung joined The Korea Times in 2014 and has worked as a journalist mainly in Korea’s finance, tech and automotive industry. He specializes in content creation, breaking news and in-depth analysis currently on transportation and mobility. You can reach him via mhlee@koreatimes.co.kr.
SK, appellate court clash over chairman's divorce settlement ruling
A front view of the Seoul High Court / Yonhap
By Lee Min-hyung
SK Group has been escalating its high-stakes clash against an appellate court over a recent ruling on a divorce settlement lawsuit between the group's Chairman Chey Tae-won and his estranged ex-wife Roh So-young, following the court's unprecedented correction of an error in its verdict, according to industry watchers, Wednesday.
Even after admitting to the mistake, the Seoul High Court upheld its ruling that Chey should pay 1.38 trillion won ($1 billion) in property division to Roh, citing her contribution to the group's stock growth.
The court also released a rare documented explanation on its calculation error while valuating the stock price of Daehan Telecom, the predecessor of SK C&C.
In 1988, Chey married Roh, the daughter of the late former President Roh Tae-woo. The court said Roh and his family "intangibly contributed" to helping Chey accumulate wealth by supporting SK Group's growth over the past three decades.
SK acquired Daehan Telecom in 1994 and changed its corporate name to SK C&C in 1998. The company was merged with SK Inc. in 2015. SK Inc. is the group's holding firm, and Chey is the largest shareholder with a stake of 17.73 percent in the firm. This amounts to around 2.2 trillion won ($1.59 billion).
The court pointed out the overall history of SK Group's growth was driven by its back-scratching alliance with the 1988-93 Roh Tae-woo administration. This is why it ruled Chey should divide a considerable amount of his wealth with Roh, the court ruled.
But SK Group said that Chey's stakes in SK Inc. should not be subject to property division, as they were inherited by his father, former SK Chairman Chey Jong-hyun, in 1994.
SK Group Chairman Chey Tae-won speaks on a divorce lawsuit with his estranged ex-wife Roh So-young, during a press conference at the group headquarters in Seoul, Monday. Yonhap
Contribution to SK's stock growth
The stake of Chey and his father's contribution to the growth of SK C&C are causing a major controversy surrounding the ongoing legal battle.
Chey said the firm's stock value rose by 125 times under the leadership of his father between 1994 and 1998. It also went on to grow 35.6 times under the son's leadership between 1998 and 2009 when it went public, according to SK.
The court rejected Chey's claim, saying that he had himself contributed to the firm's stock growth of 160 times between 1998 and 2024. Under the documented explanation, the court extended the timeline to 2024.
SK Group also immediately raised doubts over why the period was adjusted, even if the court stated that the marriage relationship between Chey and Roh broke down in 2019.
The court explained that as Chey still holds control of the group and continues his management activities, the timeline should change to include 2024.
"Chey did not end his management acts in 2009 but continues doing so," the court said in the documented explanation. "Chey's contribution to the group's stock growth is bigger than that of his father. The late former President Roh Tae-woo can also be seen to have contributed to the stock growth of the group."
SK Group, however, demanded further explanation over what the firm calls an "illogical" correction of the calculation.
"The court said their marriage came to an end in 2019 but recalculated Chey's contribution to the stock growth by extending the timeline to 2024," a legal representative of Chey said.
Property division ratio
The court maintained its order that Chey should give 35 percent of his assets to Roh in the property division, as Roh's father contributed to the growth of SK Group.
SK Group claims this does not make sense, as Chey's contribution to its stock growth is smaller than that of his father. If the Supreme Court sides with Chey, then the portion of the property division could also change, according to SK Group.
SK Group reiterated its plan to correct what it considers an unacceptable calculation of Chey's contribution to the firm's stock growth.
Rumors of slush fund
Chey also faces suspicion of having received slush funds from the former president. SK Group is rumored to have achieved solid growth after receiving illegal slush funds worth 30 billion won from the late Roh.
SK denied the rumors, saying that the relationship with the former president actually hindered its additional growth.
SK Supex Council President Lee Hyung-hee said recently that the rumor ended up tainting the firm's legacy and pride of the group's employees.
"The ball is in the Supreme Court, which has to set a specific legal standard regarding a similar case, as more and more companies will be mired in such controversies," said Choi June-sun, professor emeritus at Sungkyungkwan University Law School.