hankyoreh

Nov. 22

Thirteen months have passed since Chey Tae-won, 55, chairman of the SK Group, was sent to prison after being convicted of embezzling from the group on Feb. 27, 2014. But Chey is still serving as an executive for the SK holding company. After his conviction, he stepped down from his position as a board member (CEO), but he remains an unregistered board member (chairman).

Chey is also still listed as a board member at group subsidiaries SK Hynix and SK Innovation. In this respect, he is quite different from Kim Seung-yeon, chairman of Hanwha Group, who stepped down from his positions both as registered and unregistered executives after being found guilty.

How does Chey still hold positions that enable him to wield a great deal of influence inside the group even though he is serving a prison term for embezzling 45 billion won (US$41.42 million)?

A little known fact is that people like Chey who are sent to prison under the Act on the Aggravated Punishment, etc. of Specific Economic Crimes are banned from working at companies that are closely connected to the crime in question for five years from the day that they complete their prison term or are pardoned. The point of this provision is that, for a set period of time, offenders who committed a financial crime such as fraud, embezzlement, or breach of trust involving such a large sum that it is subject to aggravated punishment may not reestablish a connection with the company where they committed that crime.

The execution order of the law describes in detail the kinds of companies at which offenders may not work. It includes companies in which accomplices or their siblings, spouses, or direct ancestors or descendents hold a 5% or greater share and companies in which accomplices are presently employed or were employed as middle managers or executives at the time the crime was committed. Furthermore, offenders cannot get a job at companies in which the aforementioned companies have invested.

Chey Tae-won’s younger brother Chey Jae-won, 52, senior vice president at SK, and Jang Jin-won, 56, an executive at SK, were convicted as accomplishes in the case. Both at the time of the crime and today, these two individuals were and are executives at SK along with Chey Tae-won, which would trigger the clause about being employed at the same company. SK holds a 33.4% share in SK Innovation, and SK Telecom, where Chey Jae-won was employed at the time of the crime, has 20.07% ownership in SK Hynix.

Despite this fact, SK has allowed all three of these individuals to remain as executives.

“The ban on employment implies that the offender would receive some kind of economic advantage from that employment, so we decided that this doesn’t apply to Chey Tae-won, who is not being paid for this part-time position,” said an executive at SK.

On Mar. 4, 2014, Chey relinquished his position as registered board member at the group and announced that he would not receive any compensation as an unregistered board member.

SK argues that this work is not subject to the ban on employment because it is not compensated, but does this argument hold water? The law explains that it was enacted to “restore order to the economy and also to contribute to the development of the national economy by curtailing the economic activity of offenders.”

Even if Chey is an unregistered executive who is not receiving any compensation, he undeniably still exerts major influence on the group’s management.

The law and its execution order state that “the Vice Minister of Justice must always stay abreast of legal decisions. When a guilty verdict has been rendered the Vice Minister must immediately announce the ban on employment and its scope.” The Vice Minister must also “demand the termination of any offender who violates the ban,” the law says.

By Song Kyung-hwa, staff reporter

Please direct questions or comments to [english@hani.co.kr]