SK Group chairman claims ‘critical error’ in his divorce ruling

June 17, 2024

SK Group Chairman Chey Tae-won said Monday he has decided to appeal a record divorce ruling, which threatens his grip on the telecom-to-energy conglomerate, to the Supreme Court because there was a “critical error” in the calculation of his estranged wife’s contribution to the group’s growth.

Last month, an appellate court ordered Chey to pay 1.38 trillion won (US$1 billion) in property division to his wife, Roh So-young, the only daughter of former President Roh Tae-woo. The couple married in 1988 and have three children.

The court determined the combined property of Chey and Roh to be 4 trillion won, with a division rate of 65 percent for Chey and 35 percent for Roh. The court ordered Chey to pay the divided sum in cash.

“I know we have to respect the judiciary decision, but I’ve decided to appeal because there are a few reasons,” Chey said in a press briefing. “There is an objective, clear error in the court’s calculation of the property division.”

He said the error is “critical” as it pertains to whether his stocks are subject to the division and how much they are worth.

And he also said he had to make the decision to correct the court’s statement that SK Group has grown on the back of illegal funds from the Roh administration and its privileges.

“The ruling has undermined the reputation and pride of all members of SK Group, as well as mine,” Chey said.

SK Group said the court’s calculation of the stocks of Korea Telecom, the predecessor of SK C&C, now renamed SK Inc., the holding company of the group, was incorrect, inflating the asset values of the company before and after Chey inherited the company.

Chey used his father’s money to buy 700,000 shares of Korea Telecom in 1994 as part of the group’s power-transition plan.

The court set the value of Korea Telecom’s share at 8 won in 1994; 100 won in 1998, when his father died; and 35,650 won in 2009, when SK C&C was listed, attributing a 355-fold increase in market value to Chey and Roh’s contributions.

However, SK Group argued that the value in 1998 should be 1,000 won, considering two stock splits in 2007 and 2009, respectively, and that SK C&C’s stock value rose just 35.5 times over the nine-year period.

It claimed that the appellate court underestimated the portion of Chey’s inheritance and overestimated his subsequent role based on the erroneous findings, which also affected the division ratio.

“It is necessary to redraw its conclusions after correcting the fatal error,” the company said.

Chey made his first attendance related to the case at a press event following the court ruling on May 30.

He said he attended the press briefing to make a public apology in person, following the first one on June 3.

“I apologized for the distress that my personal matter has caused to the Korean people,” he said. “I just thought it was right to apologize in person.”

He also expressed confidence in SK Group’s ability to prevent the case from escalating into a management dispute or possible hostile takeover attempts.

“We’ve overcome a number of hard times,” he said. “I think we should try to prevent this case from becoming a hostile M&A crisis. But even if it does, I think we have the ability to stop it.”

If the ordered amount is divided as the appellate court ruled, it could shake up the governance of SK Group, the second-largest conglomerate in Korea, as he might have to raise the money by selling his stake in SK Inc., the holding company of SK Group, which includes SK Telecom Co., SK Innovation Co. and SK Square Co.

Chey is the largest shareholder of SK, holding 17.73 percent, worth 2.2 trillion won, through which he controls other SK Group affiliates.

“I will do my best to do my job despite the court ruling,” he said.

Meanwhile, Roh’s lawyer said the appellate court’s ruling was based on the massive increase in the stock value of SK C&C and added that SK Group’s claim seems to have disturbed future judiciary decisions.

“Despite the plaintiff’s claims, the fact that the value of SK C&C’s stock rose tremendously cannot be denied, and the conclusion will not be disturbed,” Lee Sang-won from Pyeong An Lawfirm said in a statement. “It is very regrettable that they are trying to interfere with the judiciary judgment by exaggerating trivial issues.”