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Don’t let the trial affect the company

Published: 02 Jun. 2024, 20:02

An appellate court ordered Chey Tae-won, the chairman of the country’s second-largest conglomerate, the SK Group, to pay $1 billion in cash to his estranged wife Roh So-young in what would be the largest divorce case in Korean history. Calculating Chey’s assets at 4 trillion won ($2.9 billion), the court ordered him to surrender 35 percent to his wife and pay 2 billion won separately for adultery.

The alimony the Seoul High Court ordered in the Chey vs. Roh trial was 20 times more than in typical divorce cases. The bench was extraordinarily harsh on Chey, finding him overly dismissive of domestic laws. In his earlier letter to his wife from prison, Chey confessed his extramarital affair and asked for a divorce in 2011. He created a nonprofit fund and exhibition center for his new partner while he was still married. The court estimated that Chey had spent at least 21.9 billion won for his new partner and failed to show “any signs of remorse for his foul behavior … or respect for monogamy.”

The repercussions from the ruling on property division can be huge. Roh demanded Chey surrender half of his shares in the conglomerate. Roh, daughter of former president Roh Tae-woo, claimed that more than 34 billion won from her father’s slush fund went to Chey Jong-hyun, the late father of her husband, in the 1990s to back SK Group’s purchase of a stock brokerage firm, a deal instrumental to the Chey family’s stake-holding in SK Inc., the holding company of SK Group, in 1994. Roh’s side revealed a promissory note in the deal between the elders of the two families for the first time in 30 years.

The court deemed the elder Chey had used his special relationship with the president to take aggressive management actions such as acquisition and creation of SK telecom to bid for the country’s first wireless network license. A high-profile divorce case has shed light on a money deal between the chief executives of the state and a conglomerate.

Chey vowed to appeal to the ruling at the Supreme Court. If the highest court upholds the lower court’s ruling, Chey could lose his grip over the conglomerate to pay for the alimony. Shares of SK Inc. soared more than 9 percent to underline the social ramifications of the case.

SK is not only a household name in Korea, but also an influential player overseas. SK hynix is the world’s second largest memory maker. The divorce case of the owner must not shake SK companies. The conglomerate must not disappoint its shareholders and people by wisely coping with the owner risk and sustaining its leadership in the heated global chip race.