SK Chairman Chey Tae Won Indicted on Embezzlement Charges in South Korea
By Shinhye Kang and Jun Yang – Jan 5, 2012 5:55 AM ET
Chey Tae Won, the chairman of South Korea’s third-largest industrial group, was indicted on charges that he embezzled funds from SK Holdings Co. (003600) affiliates to cover investment losses by him and his younger brother.
Seoul prosecutors, who held a televised briefing on Chey’s indictment today, didn’t detain the 51-year-old. The chairman hasn’t used any company money inappropriately and will prove his innocence in court, SK said in an e-mailed response to questions from Bloomberg News.
SK Holdings has businesses including oil exploration and refining, chemicals, telecommunications and transportation. The indictment came on the same day that SK group (SKGZ) companies said they would more than double investment to 19 trillion won ($16.5 billion) this year from 2011 and hire 7,000 more workers.
The investigation may have a “psychological” impact on SK companies while it shouldn’t affect the day-to-day running of individual businesses, said Lee Jin Woo, a fund manager at Seoul-based KTB Asset Management Co.
Chey, who in 2008 was pardoned by President Lee Myung Bak of a fraud conviction, pledged to keep his businesses unaffected by the current investigation, SK said in a statement on Dec. 23.
Had the indictment come earlier, it could have derailed a large acquisition like Hynix, said Kim Hong Sik, a Seoul-based analyst at NH Investment & Securities.
Vice Chairman Chey Jae Won was arrested on Dec. 29. The brothers are accused of misappropriating money to make up for futures and options investment losses.
The SK group has roots stretching back seven decades to textiles manufacturing.
SK Holdings, the de facto holding company for the group, rose 1.2 percent to close at 129,500 won in Seoul trading while the benchmark Kospi index dropped 0.1 percent.
The stock fell 13 percent in 2011, while Kospi declined 11 percent.
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