SK Group said the prosecution’s claims of embezzlement by its chairman Chey Tae-won and his younger brother are largely based on misunderstanding and exaggeration.
“Foreign investors are worried about the group owner’s risks, but many of the prosecution’s allegations are not based on facts,” said SK spokesman Lee Man-woo. “We are confident that all the facts will be clarified in court.”
SK Group, one of the country’s biggest conglomerates, is grappling with bad publicity stemming from the prosecution’s indictment of its top executive. The scandal also came as the group acquired Hynix Semiconductor, the world’s second largest chipmaker.
The conglomerate’s official stance is that chairman Chey was not involved in the alleged embezzlement of corporate funds, arguing that the prosecution’s charges are full of “holes.”
Chairman Chey and his younger brother, vice chairman Jae-won, have been under prosecutorial investigation on allegations that they laundered company money to cover some 200 billion won in losses from futures trading.
At the heart of the dispute, based on the prosecution’s claims, are venture capital firm Benex Investment, set up by the Chey brothers, and a futures investor named Kim Won-hong. Calling it “a new technique” for corporate embezzlement, the prosecution said Benex Investment played a role as an illicit channel through which the Chey brothers embezzled to make up for their investment losses.
It was in October 2008 that SK invested 49.7 billion won in Benex to explore a new growth business. The prosecution noted that 45 billion won of the initial investment was later withdrawn for the Chey’s futures trading investment. Additional injections of funds from other SK affiliates as well as loans from banks were also deemed embezzlement.
“The prosecution’s view is problematic, as 45 billion won was returned one month later to Benex, including interest payout. Other investment funds were also returned,” SK said.
The group said that embezzlement should involve the actual loss of money, but all the investments involving Benex were handled properly without any loss of company funds. Transactions were also executed under signed contracts, which were led by Benex officials. SK affiliates did not suffer any financial loss from the fund, either, the group said.
The prosecution said that chairman Chey was at the center of the embezzlement, largely because such transactions could not have been done without direct involvement of a top executive in the group. SK’s position, however, is the opposite, saying that the prosecution is just “guessing” without offering proof.
Benex was a promising company that attracted a huge amount of investment funds from other conglomerates other than SK, the group claimed, referring to the prosecution’s allegation that the fund was used primarily as a private fund operation channel for chairman Chey.
The prosecution also claimed that vice chairman Chey Jae-won had allegedly peddled his influence on Benex's purchase of stake in IF Global. However, SK countered that Benex took over the IFG stake through a normal investment procedure, considering the future value of Time Education, a leading education venture that once considered listing on the Nasdaq stock market in the U.S. Moreover, SK said that Benex later sold the stake in IFG for a profit.
By Yang Sung-jin (
insight@heraldcorp.com)
