A Supreme Court decision Thursday to send back a lower court ruling on SK Group Chairman Chey Tae-won's divorce from his estranged wife, Roh Soh-yeong, for recalculation of the settlement amount has partially eased uncertainty over his control of Korea's second-largest conglomerate.

The top court's decision overturned a key reason behind the Seoul High Court's May ruling that favored Roh. The lower court had accepted her claim that her father, former President Roh Tae-woo, had supported SK Group through an illegal slush fund worth 30 billion won ($22 million), thereby recognizing her contribution to the couple's marital assets and ordering Chey to pay her 1.38 trillion won ($970 million).

The Supreme Court ruled that the former president's actions -- even if proven -- cannot be legally recognized, and that the money cannot be considered Roh's contribution when determining the division of assets. Given this, the high court is expected to take a closer look at the alleged slush fund and recalculate the couple's marital property.

The Chey-Roh divorce saga is one of the most high-profile and costly divorce cases in recent Korean history.

'Sunkyong - 30 billion won'

The divorce case dates back to 2015, when Chey revealed in a letter to a local newspaper that he was having an affair with Kim Hee-young, also known as Chloe Kim, and had an out-of-wedlock daughter.

Chey filed the divorce suit in February 2018, after failing to divorce by consent. Roh initially refused to divorce Chey, but lodged a counterclaim in December 2019, accepting the divorce while demanding 43 percent of Chey's stake in SK Group's holding company, SK Inc., as part of the property settlement.

In December 2020, the Seoul Family Court found Chey responsible for the divorce and ordered him to pay Roh a 66.5 billion won settlement and 100 million won in alimony.

At the time, the court recognized Chey's 17.5 percent stake (now 17.9 percent) in SK Inc. as "special property," meaning assets not formed through the couple's joint efforts, since it had been gifted to him by his father. The settlement was calculated by dividing the remaining assets at a ratio of 60 to 40 between Chey and Roh.

In the high court ruling, however, judges ordered Chey to pay a 1.38 trillion won settlement to Roh, after estimating the couple's marital assets at 4 trillion won and dividing them at a ratio of 65 to 35.

The 20-fold increase came after the high court said that Roh and former President Roh, contributed to SK Group's growth, accepting Roh's claim that the former president's 30 billion won slush fund was used for the benefit of SK Group.

During an appeals trial, Roh's side submitted two memos from 1998 and 1999 written by her mother, which note "Sunkyong (the former name of SK) - 30 billion won" and photos of six 5 billion won promissory notes, issued by Sunkyong Construction (now SK Ecoplant) in December 1992. The judges accepted these as key evidences supporting Roh's claims.

'For or from'

However, controversy emerged over whether the note indicated the fund was "for" or "from" SK Group, as the court did not verify when, where and how the 30 billion won was delivered to the conglomerate.

The promissory notes indicated that Sunkyong Construction would pay the bearer the stated amount. The court interpreted them as proof that former President Roh had provided financial support to SK, accepting his daughter's claim that the money was delivered in 1991, a year before the slush fund was moved to the group.

However, former SK Group co-Chairman Son Kil-seung said in a 2024 interview that the promissory notes were issued to financially assist former President Roh after he left office, not a fund handed over to SK Group, and he delivered them to the former president's aide himself.

Adding to the controversy, the high court ruling was later found to have contained calculation errors regarding the value of shares in the now-defunct Daehan Telecom, which later became the basis for SK Inc. stocks.

Due to the miscalculation, Chey's contribution to the rise in SK Inc.'s stock value was overstated, from 35 times to 355 times. The appellate court later corrected the error but argued it did not significantly affect the overall ruling.

In Thursday's ruling, the justices said the appeals court decision "misunderstood the legal principles under the Civil Act and failed to conduct the necessary review." The act's Article 746 stipulates that no claim for the return of benefits shall be made if the property was provided for an illegal cause, and this principle should be considered in property division cases.

Risks alleviated

As the top court dismissed Roh's claims, the settlement amount is expected to be lower in the recalculation process, significantly lowering the risks to Chey's control over SK Group.

Among the couple's 4 trillion won in assets estimated by the high court, approximately 3 trillion won is Chey's stake in SK Inc. As of late June, Chey's key assets include a 17.9 percent stake in SK Inc., 29.4 percent in SK Siltron, 3.21 percent in SK Chemical and 0.12 percent in SK Discovery, according to a regulatory filing. Given that SK Siltron is a non-listed company and its value is yet to be determined by the market, most of Chey's assets are SK Inc. shares.

Because of this structure, if the Supreme Court had upheld the high court's decision, the most likely option for financing the settlement would have been selling Chey's stake in either SK Siltron or SK Inc.

Since Chey's 17.9 percent stake in SK Inc. is not enough to fend off hostile takeovers, further reducing it could put the group's control at risk, similar to when global hedge fund Sovereign Asset Management attempted to seize control of SK Group in 2003.

The group's ongoing talks to unload SK Siltron are also expected to become more favorable for Chey. SK Inc. is seeking to sell its 70.6 percent stake in SK Siltron but recent reports suggested that Chey may also put his 29.4 percent stake in SK Siltron up for sale to expedite the deal. With the Supreme Court ruling easing the urgency to raise funds, SK is now seen as being in a better position to negotiate a fairer price for the sale.

Chey is now expected to focus on his role as the host of the upcoming Asia-Pacific Economic Cooperation CEO Summit 2025 in Korea, renewing the group's portfolio more centric to artificial intelligence (AI) and assist Seoul's negotiations with the United States over tariffs.

Along with the heads of Samsung Electronics, Hyundai Motor and LG Group, Chey is set to visit the U.S. to discuss cooperation on the Stargate AI data center project. The upcoming meeting is expected to take place at Mar-a-Lago in Florida, the private resort of U.S. President Donald Trump.

Supreme Court eases control risk for SK chairman in divorce ruling - The Korea Times