[EDITORIALS]Still some problems at SKThe board of directors at SK Corp., the oil- refining flagship of SK Group, approved the firm’s plan to swap 850 billion won ($711 million) worth of receivables in SK Global, its troubled general trading affiliate. The decision came after a marathon 11-hour discussion. The worst is past now for SK Global, which was at the brink of liquidation, and its parent group SK Group, which was at the risk of falling apart. But the decision was a makeshift one; there are numerous tasks to be dealt with before wrapping up the matter.
First of all, foreign investors in SK Corp. such as Sovereign Asset Management, small domestic shareholders, and the SK Corp. labor union all said they will seek legal redress of the decision. It is also uncertain whether foreign creditors of SK Global will accept the plan by domestic financial institutions to allow a debt rescheduling for SK Global. How to persuade them to cooperate is another daunting task in reviving SK Global.
If the creditors’ bailout plan is finalized, that will smooth the road for SK Global’s revival, but if the company fails to turn around as projected, there will be more pressure on the creditors and SK affiliates. SK Global must be restructured, and those responsible for the turmoil at SK Global also must pay for what they did.
The decision of the directors was inevitable to minimize the shock to the Korean economy but controversial because it went against market principles. As the foreign press pointed out, the decision could work against Korean efforts to convince a dubious world that its corporations are being managed transparently.
The courts also warned the business community by barring three executives, including the SK Corp. chairman Chey Tae-won, from voting on the matter. Mr. Chey has also been found guilty of insider trading.
Businesses complain that punishing them for practices accepted in the past will dampen business activities. Perhaps so. But the jae-beol must read the new message ― that era has passed. Transparent management and clean accounting books are the new order.