SK Chairman’s control at risk due to love affair

CHEY TAE-WON, ROH SOH-YEONG

SK Group Chairman Chey Tae-won’s confession on Tuesday of an extramarital affair, a love child and his wish to split with his wife, Roh Soh-yeong, is expected to place a strain on the nation’s third-largest conglomerate.

Although Roh has sent text messages to reporters saying she refuses a divorce, a messy divorce battle could affect corporate management - especially if a settlement affects Chey’s control of the group.

It has been only four months since Chey got sprung from a four-year prison term for embezzlement by a presidential pardon, which raised hopes the group would return to normalcy after a lengthy management vacuum.

Although shares of SK Telecom, a key pillar of SK Group, edged up 0.2 percent on Wednesday, they plunged by as much as 6.5 percent the previous day when Chey made the surprise revelation through a letter to the Segye Ilbo, a local daily.

Roh is adamant that she won’t let her husband pursue his new romance freely by giving him a divorce.

“I am to blame for everything,” wrote Roh, director of the Art Center Nabi, a gallery belonging to SK, in a text message sent to several reporters late Tuesday. “I will protect my family. My husband is a victim, and I failed to read his emotions and hurt him. I am even considering raising Chey’s love child myself.”

She added that her three children - all in their 20s - don’t want their parents to divorce.

An SK spokesman said the chairman would like to resolve the issue through conversations rather than a lawsuit.

After a venerable statute outlawing adultery was struck down in February, out-of-wedlock affairs can no longer be prosecuted on complaints from an injured party in Korea. Before the Constitutional Court decriminalized adultery, violators faced up to two years in prison.

But the decision raised controversy over whether an individual should be protected if a cheating spouse applies for a divorce. The Supreme Court concluded in September that it is “too early” to acknowledge a divorce filing by a “blameful spouse.” The ruling said Korea has yet to be equipped with the legal device to protect a partner who is forced to divorce.

Even if Chey finds his way to a divorce court, the division of his fortune will become very messy. The key is Chey’s 23.4 percent stake in SK Telecom. He owns minimal stakes in other subsidiaries.

The couple tied the knot in 1988, the year Chey’s father-in-law, Roh Tae-woo, was inaugurated as president of Korea and before Sunkyung, the former name of SK, acquired Korea Mobile Telecom, then a government-owned company, in 1994. It is public knowledge that then-President Roh used his influence at the end of his term in 1993 to help SK’s entry into the telecom business, both directly and indirectly.

There is a high chance that a court will assign a significant portion of Chey’s assets to Roh. Korean courts order 50-50 divisions of postmarriage properties for couples who are married for over 20 years. Should Chey split his stake in SK Telecom by half for divorce, his control of the No. 1 mobile carrier as a chairman will inevitably be weakened, analysts say.

The 55-year-old chairman’s love affair with a woman surnamed Kim, rumored to be a 40-year-old Korean-American divorcee with a son from her previous marriage and a six-year-old daughter with Chey, also raised fresh allegations about Chey’s embezzlement.

A former journalist-blogger claimed the chairman misappropriated an SK subsidiary’s money to buy the lover’s house at above market value, bloating her bank account.

BY SEO JI-EUN [seo.jieun@joongang.co.kr]