SK Group Chairman Chey Tae-won may let out a sigh of relief, at least for now, as the Supreme Court on Thursday overturned a lower-court ruling that ordered the 65-year-old Chey to pay his ex-wife Roh Soh-yeong, the 64-year-old director of Art Center Nabi, 1.38 trillion won ($973.2 billion) as divorce settlement.
The Supreme Court rejected the appellate court's recognition of slush funds allegedly provided by Roh Soh-yeong's father, former President Roh Tae-woo, as the foundation of SK Group's growth, saying such money cannot be considered in a divorce settlement.
'Illegal funds can't be taken into account'
The Supreme Court ruled Thursday to "reverse the decision regarding the asset division claim and remand the case to the Seoul High Court," effectively invalidating the 1.38 trillion won settlement. The 2 billion won in alimony awarded to Roh So-yeong, however, remains intact.
The ruling comes eight years and three months after Chey filed for divorce mediation in July 2017, and one year and three months after the case was submitted to the Supreme Court in July 2024.
At the center of the dispute was whether SK shares owned by Chey qualify as separate property -- assets owned before marriage -- and thus are exempt from division. Chey argued the shares were acquired using 280 million won gifted by his late father, SK founder Chey Jong-hyon, before the marriage. Roh Soh-yeong, on the other hand, claimed the group's expansion was fueled by 30 billion won in slush funds allegedly provided by her father, former President Roh Tae-woo.
While the appellate court accepted Roh Soh-yeong's claim and ordered a record-breaking settlement, the Supreme Court struck it down, citing that any funds linked to bribery received during Roh Tae-woo's presidency must be considered "illegal enrichment."
"Even if former President Roh is found to have provided 30 billion won to the late Chey Jong-hyon, father of SK Group Chairman Chey Tae-won, the source of the funds appears to be bribes received during Roh's presidency," the court said. "Such money constitutes illegal enrichment and cannot be considered in the division of assets."
The court also emphasized that former President Roh's actions -- secretly providing bribe money to his daughter and her in-laws and impeding government efforts to trace and seize the funds -- were "antisocial, unethical and immoral," and thus fall outside the protection of the law.
The court also rejected Roh Soh-yeong's claim that she was not seeking a refund of the money but recognition of her contribution, stating that "the illegality of the funds cannot be separated."
Since the funds provided by former President Roh were illegally obtained, "his actions are not legally protected and thus cannot be considered as part of the defendant's contribution in the division of assets," the ruling said.
In addition to the slush funds, the court said that 3.29 million SK shares that Chey donated to the Korea Foundation for Advanced Studies, the Chey Institute for Advanced Studies, and 18 family members must also be excluded from the division of assets.
The ruling criticized the appellate court for misapplying the law on illegal enrichment and property division and failing to conduct necessary deliberations, which could have affected the outcome.
Roh Tae-woo's slush funds backfire
In December 2022, the district court dismissed Roh Soh-yeong's claims regarding her father's contribution and ordered Chey to pay 66.5 billion won, excluding SK shares.
But the appellate court dramatically reversed that ruling in May 2024, citing a note titled "Sunkyung 30 billion" found among the belongings of Roh Soh-yeong's mother, Kim Ok-suk, and six 50 billion won checks in promissory notes issued by Sunkyung Construction, a predecessor of SK ecoplant, as evidence of the alleged slush funds.
Chey's legal team denied receiving such money and argued that even if it had been received, allowing Roh to claim it would effectively legitimize criminal proceeds. The appellate court disagreed, citing a Supreme Court precedent involving former SsangYong Group Chairman Kim Suk-won, in which hiding 20 billion won in slush funds was not deemed a breach of social order.
However, Thursday's Supreme Court ruling reversed that precedent and declared that such illegal funds cannot be considered in divorce proceedings.
A court official said the ruling reaffirms the legal principle under Article 746 of the Civil Act that states a person who engages in socially unacceptable conduct is not protected by the law. The remanded case will be reassigned to a different panel at the Seoul High Court, likely either the family affairs divisions 1 or 3.
Relief for now, challenges ahead
The ruling comes as a relief for SK Group, which could have faced one of the largest upheavals in its history, had it been ordered to pay the trillion-won sum.
Even with another round of deliberations ahead, the asset division is now likely to be significantly reduced. The 2022 first court awarded Roh only 66.5 billion won, and a return to that assessment could mean Chey would not need to sell off large amounts of SK Inc. shares, which form the core of his control over the conglomerate.
Thursday's ruling also allows Chey to shift focus back to corporate management. He faces key tasks including heavy investments in AI semiconductors via SK hynix, restructuring through SK Innovation, and managing the fallout from a recent hacking incident at SK Telecom.
As chairman of the Korea Chamber of Commerce and Industry, Chey is also leading preparations for the APEC Economic Leaders' Meeting in Gyeongju at the end of October. He is expected to play a key role in navigating U.S.-China trade tensions and coordinating with the Lee Jae Myung administration.
SK declined to issue an official statement, but a company official said, "We hope this clears up the misunderstanding that SK's growth was based on slush funds, and restores our employees' pride and dignity."
Chey's legal team said they "respect the Supreme Court's decision" and will "continue to participate in the remaining proceedings with sincerity."
Still, SK Inc. shares closed at 218,500 won, 5.62 percent lower than the previous day.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY KIM JUN-YOUNG, KIM KI-HWAN [[email protected]]