A court on remand has ordered SK Group Chairman Chey Tae-won, 65, to pay 944 billion won to Roh Soh-yeong, 65, director of the Art Center Nabi, as a divorce property settlement. In 2019, Roh filed a countersuit indicating she would accept Chey's divorce petition, and the SK shares she demanded were worth about 1.39 trillion won at the time.
Whether either side will file a re-appeal has not been decided. However, since the ruling on remand followed the intent of the previous Supreme Court decision, some project that the conclusion is unlikely to change in a re-appeal.
According to legal circles on the 25th, the Family Division 1 of the Seoul High Court (presiding judge Lee Sang-ju) ruled on the 24th in the divorce lawsuit on remand that "Chey shall pay Roh 944 billion won." The court also ordered Chey to pay delinquency interest of 5 percent per year from the day after the ruling becomes final until payment is completed. This amounts to 47.2 billion won per year, or about 130 million won per day.
SK Shares Included in Division...Contribution Through Housework, Childcare, External Activities
The court included Chey's SK shares as marital property subject to division. It found that the value of the shares rose significantly through Chey's management activities during the marriage, and that Roh also contributed to the formation and maintenance of the assets not only through housework and childcare but also through external activities related to SK Group. The court explained, "These shares are assets acquired under Chey's name during the marriage, and it is recognized that both spouses contributed to their formation and the maintenance and increase of their value."
The first and second trials reached different conclusions on whether the SK shares should be included. The first trial judged the SK shares to be Chey's separate property and excluded them from division. Separate property refers to property held individually from before the marriage and is in principle not subject to division. The appellate trial, on the other hand, recognized Roh's contribution by comprehensively considering the marriage period and the timing and process of asset formation, and included the shares in the division.
Share Value Based on Figures From Two Years Ago...Roh Tae-woo Slush Fund Excluded
The share value was calculated based on April 16, 2024, the closing date of arguments in the appellate trial. As SK's stock price surged recently, the point in time on which to base the assessment of asset value emerged as a point of contention. At the closing of arguments in the appellate trial before remand, on April 16, 2024, SK's stock price was in the 160,000 won range. However, on the 26th of last month, the closing date of arguments in the trial on remand, it had risen to the 815,000 won range. Chey holds about 12.98 million shares, worth about 2.076 trillion won at 160,000 won per share, but about 10.575 trillion won at 815,000 won per share.
The court cited Supreme Court precedent that even when property division is claimed after a judicial divorce becomes final, the property subject to division and its value should in principle be determined based on the closing date of arguments in the fact-finding trial of the divorce lawsuit. The court said, "Although the stock price rose sharply, it cannot be said that Chey's management contribution had no effect on that rise," and "it is difficult to conclude that all gains or losses arising from whether the shares were disposed of after the divorce became final must be shared with the former spouse."
The court excluded from the calculation of Roh's contribution the 30 billion won in support from the side of former President Roh, which had been reflected in the appellate trial. The court said that even if former President Roh had delivered slush funds to SK, this could not be regarded as a contribution by Roh's side. Earlier, Roh's side submitted a slush fund memo of 90.4 billion won written by her mother, Kim Ok-sook, asking that her contribution to the formation of SK Group's assets be recognized. The claim was that former President Roh's 30 billion won in slush funds was passed to his in-law, former SK Chairman Chey Jong-hyun, and used to acquire Pacific Securities or in SK Group's management activities. The Supreme Court had judged that even if the funds actually existed, they constituted illegal funds and therefore could not be evaluated as a contribution by Roh's side in the property division process.
Assets already gifted in relation to the formation and maintenance of common property before the breakdown of the marriage were also excluded from the division. Roh's share was slightly lower than before the remand. The court said, "A significant portion of the marital common property consists of assets formed and acquired during the marriage," and "in order to fairly distribute the common property achieved through the cooperation of both parties, we took into account that the value of Chey's shares rose sharply after the closing date of arguments in the appellate trial before remand."
Chey 66.7%, Roh 33.3%...Stock Price Rise Considered
The property division ratio was set at 66.7 percent for Chey and 33.3 percent for Roh. The first trial set the division ratio at 60 percent for Chey and 40 percent for Roh, while the second trial set it at 65 percent for Chey and 35 percent for Roh. The fact that SK's stock price rose significantly after the closing date of arguments in the appellate trial before remand was considered in determining the property division ratio. The explanation is that it was a measure to divide the common property more fairly. Some in legal circles analyze that Roh's share might have been smaller had the property division lawsuit been concluded earlier.
However, the court allowed Chey to retain the SK shares and ordered that the shortfall in the portion due to Roh be paid in cash. The court ordered the cash division in consideration of the fact that the shares are the basis of Chey's management rights and control over SK Group. Accordingly, even if the ruling becomes final, the direct impact on SK Group's governance structure is expected to be limited. The court explained, "Considering that the SK shares held by Chey serve as a basis for the company's management rights or control, as well as the title, form, circumstances of acquisition, and usage of the property subject to division, we determined that Chey shall pay in cash the shortfall in Roh's portion under the property division ratio."
Meeting of a Conglomerate Chief's Eldest Son and a President's Daughter...Divorce Mediation Began in 2017
Chey, the eldest son of the late former SK Chairman Chey Jong-hyun, and Roh, the daughter of former President Roh, met while studying at the University of Chicago in the United States. They married in 1988, drawing public attention as the "wedding of the century" between the eldest son of a conglomerate chief and a president's daughter. The wedding was held grandly at the Cheong Wa Dae guest house, with then Prime Minister Lee Hyun-jae, Roh's mentor, officiating.
The litigation between the two sides began when Chey disclosed a child born out of wedlock through the media. In December 2015, Chey sent a three-page A4 letter to Segye Ilbo to the effect that "I have a mistress and a child born out of wedlock. It is currently difficult to continue married life." It amounted to telling the world that the marriage had not been smooth. At the time, his daughter born out of wedlock was 6 years old.
In July 2017, Chey filed for divorce mediation seeking a consensual divorce from Roh, but in February 2018 the two sides failed to reach an agreement, and formal litigation proceedings began. In December 2019, while the divorce lawsuit filed by Chey was underway, Roh filed a countersuit demanding property division. At the time, Roh wrote, "I see no hope. I will let him find the happiness he wants." In filing the countersuit indicating she would accept the divorce, Roh demanded 300 million won in consolation money and 42.29 percent (6.5 million shares) of the SK shares held by Chey. The value of the 6.5 million SK shares at the time was about 1.39 trillion won. She later expanded the demanded share ratio to 50 percent during the trial.
If either side objects to the ruling on remand, there is a possibility of a re-appeal to the Supreme Court. However, since the ruling on remand followed the intent of the previous Supreme Court decision, some project that the conclusion is unlikely to change in a re-appeal.
After the ruling on remand, Chey's attorney told reporters, "Chey feels sorry for causing concern to many people throughout this process," and "he will state his specific position on the ruling after closely reviewing the judgment." Chey did not appear in court that day. Chey held a dinner meeting with Nvidia CEO Jensen Huang in Woodside, California.
Roh's attorney left the court without separately stating a position on the ruling.
