Top court to review SK chief’s $1b divorce settlement

Chey Tae-won buys time as SK speeds up rebalancing efforts amid financial strain

SK Group Chairman Chey Tae-won (Bloomberg)

South Korea’s Supreme Court has decided to review SK Group Chairman Chey Tae-won’s bid to overturn the country's most expensive divorce suit, opening up the possibility for the head of the nation’s second-largest conglomerate to reduce the size of the settlement.

On Saturday, the justices accepted the appeal by Chey who was ordered by the Seoul High Court in May to pay his estranged wife Roh Soh-yeong 1.38 trillion won ($1 billion), or 35 percent of their common wealth, in property division.

“When it comes to divorce cases, the highest court turns down more than 90 percent of appeals. The court’s review means there is still room for argument,” an industry source close to the matter said on condition of anonymity.

The Supreme Court’s decision comes after Chey appealed the ruling in July, claiming errors in the calculation of Roh’s contribution to SK’s growth. The appellate court immediately admitted the mistake but maintained the order and the settlement amount. The top court did not reject the appeal before the midnight deadline Friday, allowing further review of the case.

The issue contested in the appeal is whether Roh’s father, former President Roh Tae-woo, provided a slush fund of 30 billion won to the SK chief’s late father Chey Jong-hyun, former chairman of Sunkyung Group, the predecessor of SK.

The high court recognized the purported slush fund based on a note made by the former president’s wife. But Chey’s lawyers denied the fund’s existence, citing a lack of sufficient evidence.

Chey also claims that his stocks in SK Inc. should be excluded from the property division as they are considered assets inherited from his father, rather than wealth created by Chey himself. Chey, who owns 18 percent of the holding unit, effectively controls the group’s key affiliates, including SK hynix, SK Innovation and SK Telecom.

With the new appeal accepted, it is expected to become a lengthy legal battle again, giving Chey time to raise the cash he has to pay Roh.

A verdict is expected in the first half of next year. Chey will then have to pay the settlement if the court makes a final ruling itself, but if the case is sent back to the high court, a final decision will take longer.

“Even when the fund is found to have worked as seed money for SK’s growth, controversy remains because the daughter is technically inheriting the money, now worth almost 50 times the original value, without paying any taxes,” the source said.

“If the court rules that SK shares are assets owned by Chey only, the settlement is likely to be lowered to the amount ordered in the first trial.”

The lower court had ordered Chey to pay 66.5 billion won in the first trial in December 2022, but the amount was raised to 1.38 trillion won in the second trial, an almost 20-fold increase.

With the legal relief, the SK chief is expected to embark on business trips in the remaining months of the year as he seeks to bolster the group’s readiness for business uncertainties in key markets, including a leadership change in the US.

By Park Han-na(hnpark@heraldcorp.com)