SK Group Chairman Chey Tae-won issued an apology Monday for raising public concerns with his high-profile divorce settlement but made it clear that he will appeal to the Supreme Court because a “flagrant error” was found in the court ruling that now threatens his grip on the telecom-to-chips conglomerate.
Last month, the Seoul High Court ruled in favor of Chey's estranged wife Roh Soh-young in their divorce settlement and ordered the SK chief to pay 1.38 trillion won ($1 billion) in property division and 2 billion won in a one-off alimony payment. The ruling is the largest property division in a divorce case in South Korean history.
"Before everything else, I apologize for raising concerns and worries for the people with my personal affair," Chey said as he bowed, making a surprise appearance in a press briefing in Seoul earlier in the day.
"I thought I needed to stand before the media and give my direct apology. The court's ruling should be respected but I decided to file an appeal to the Supreme Court, first of all because there has been an objective and flagrant error found in the property division."
Chey said he "could not but" point out the error to the logic of the court's ruling, as the error was made in the preconditions the judges considered to decide that SK shares are his assets subject for division to Roh.
Following Chey's press briefing, the appellate court took in Chey's claim and made corrections to the written judgment, but held up its original sentencing for the property division.
Lee Dong-keun, Chey's attorney from the Yoon & Yang law firm, explained that the appeals court "miscalculated" the numbers and "significantly overrated" Chey's contributions to the growth of SK Group since he succeeded his father, the late former Chairman Chey Jong-hyun.
"The appellate court concluded with an erroneous outcome that made Chey Tae-won out to be a 'self-made chaebol son' who founded the business and designated SK shares as marital property to determine the property division ratio," Lee said.
According to Lee, the late chairman gave 280 million won to the junior Chey in 1994 for the first son to purchase shares of Daehan Telecom, which became SK C&C.
At the time, the son purchased 700,000 shares of Daehan Telecom, which was in negative equity, at 400 won per share. Daehan Telecom changed its name to SK C&C in 1998. After executing two rounds of stock splits in 2007 and 2009 the nominal value of SK C&C shares became one-fiftieth of the original value, Lee said.
The appeals court calculated the value of one Daehan Telecom share at 8 won in November 1994. Then the court miscalculated the value at 100 won per share in May 1998 before the former chairman passed away, but it should have been valued at 1,000 won, the attorney said. It was then valued at 35,650 won per share in November 2009 when SK C&C went public.
With the purportedly wrong numbers, the court concluded that the son’s contribution led the company to grow 335 times bigger, while his late father contributed to the company's growth by 12.5 times.
Calculating with the purportedly correct figure of 1,000 won, not 100 won, the father’s contributions would rise to 125 times, while the son's contributions would be lowered to 35.5 times, according to Lee.
Over this, the appellate court admitted the mistake in calculation and revised the written judgment to value the share of Daehan Telecom's share at 1,000 won and lowered the son's contributions.
At the press briefing, the current chairman also reiterated that the court's ruling stating that SK Group grew on slush funds provided by the late former President Roh Tae-woo, the father of his ex-wife, was also "not true" and that he needs to appeal "to recover the honor and pride of all members of SK Group that has been tarnished by the ruling."
When asked about the potential threat of a hostile takeover or hedge fund activism campaign for SK Group in case Chey decides to shed a sizable portion of his SK shares to secure the cash to pay his wife, Chey said the company is "capable" of preventing such an outcome.
"We have overcome numerous crises. I believe we are potent enough to resolve such problems. We will have to prevent such (a hostile takeover) from happening first, but even if the situation heads that way, I believe we have the capability to stop it from happening," Chey said.
Chey's legal team also denied the existence of any such slush fund and contended that the company had actually been disadvantaged because Chey was the son-in-law of the late former president.
