Chairman Chey Tae-won Appeals This Week
Full-Scale Denial of 30 Billion Won Slush Fund
Promissory Note ≠ Proof of Slush Fund Provision
Active Defense of Telecom Business Privileges
Choi Tae-won, chairman of SK Group, strongly refuted what he called a critical error in the appeal trial of the divorce case involving No So-young, director of the Art Center Nabi, and decided to appeal to the Supreme Court. SK Group also emphasized that the correlation between the Roh Tae-woo administration and the group's growth is not significant, as the property division ruling amounting to 1.3808 trillion won could affect the group's management rights. Chairman Choi's side is expected to focus all efforts on rebutting the critical error and the key issue of the second trial?the “300 billion won slush fund”?once the appeal trial begins.
Chairman Chey Tae-won of SK Group and Director Noh So-young of Art Center Nabi. [Photo by Yonhap News]
According to industry sources on the 17th, Chairman Choi's side plans to file an appeal this week. The existence of the 30 billion won slush fund allegedly linked to former President Roh is expected to be the core issue in the appeal trial. While the property division amount was only 66.5 billion won in the first trial, it surged more than 20 times in the appeal trial, citing that the slush fund contributed to the current value formation of SK Co., Ltd. shares.
Verification of the Slush Fund
The appellate court judged that Choi Jong-hyun, the late SK chairman and father of Chairman Choi, received 30 billion won from former President Roh and used it to acquire Taepyungyang Securities. The evidence includes a memo titled “Seonkyung 30 billion” kept by No So-young’s mother, Kim Ok-sook, and four promissory notes worth 5 billion won each issued under the name of Seonkyung Construction (now SK Ecoplant) (an additional two notes are claimed to have been delivered to SK but have not been confirmed).
Chairman Choi's side is expected to argue in the appeal trial that they never received any slush funds. Regarding the existence of the promissory notes, they claim that former President Roh continuously requested funds from SK and issued the notes after his presidential term ended as activity expenses. Some legal experts view the notes as evidence that SK promised to provide 30 billion won to former President Roh, and argue that it is unreasonable to prove that former President Roh provided slush funds.
SK’s side also maintains that even if the slush funds were received, there is no evidence that they were used to acquire Taepyungyang Securities. The promissory notes were issued in December 1992. Since the acquisition of Taepyungyang Securities occurred in 1991, it is difficult to see that the slush funds were delivered and used as acquisition funds at that time. Therefore, they are expected to raise doubts about the lack of proof regarding the delivery or usage method. If the slush funds were not used for the acquisition of Taepyungyang Securities, the basis for including SK Co., Ltd. shares in the property division may weaken.
Chairman Chey Tae-won of SK Group is expressing his position on recent trial issues on the 17th at the SK Seorin Building in Jongno-gu, Seoul. (Provided by SK)
Preferential Treatment in Entering the Mobile Communications Business
The second trial concluded that former President Roh’s intangible contribution played a role in SK’s entry into the mobile communications business. However, Chairman Choi's side plans to counter by stating that there is no content or evidence that former President Roh instructed officials to give SK preferential treatment, nor is there evidence that SK used its relationship with the president for business purposes.
Rather, Chairman Choi's side intends to emphasize the disadvantages SK suffered due to being the president’s in-law’s company. SK was selected as the second private mobile communications operator in August 1992 during the Roh Tae-woo administration but returned the business license within a week amid allegations of preferential treatment. SK’s entry into the mobile communications business only took place after President Kim Young-sam took office.
Former President Roh also stated in his memoirs, “Because of my special relationship with Seonkyung, it escalated into a political issue, eventually leading to Seonkyung returning the business license. Looking at the next administration where Seonkyung eventually acquired the mobile communications business, it can be said that their capability was clearly superior to other companies. Yet, I cannot understand why there are still various rumors about the selection of the second mobile communications operator.”
Illegal Slush Funds and No So-young’s Contribution
Although the slush funds were recognized as the basic funds for the property division lawsuit, opinions differ on whether they should be considered as contributions from the daughter of the slush fund creator. Doubts also arise about whether the 1.3808 trillion won, which grew from the 30 billion won, can be regarded as No So-young’s money. This is because there is no evidence that No So-young contributed by requesting help from former President Roh regarding the provision of the 30 billion won slush fund or the entry into the mobile communications business.
Some argue that these funds should be recovered into the national treasury, reflecting such concerns. Political circles and civic groups are demanding a thorough investigation into the creation of Roh Tae-woo’s slush funds and are urging the National Assembly to enact special legislation to recover the slush funds.
Lee Hyung-hee, Chairman of the Communication Committee at SK Supex Council, is explaining SK's position on recent trial issues at the SK Seorin Building in Jongno-gu, Seoul, on the 17th. (Photo by SK)
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