Bloomberg News

SK Holdings Vice Chairman Chey Arrested in Embezzlement Case

December 30, 2011

(Adds comment from fund manager in fifth paragraph.)

Dec. 29 (Bloomberg) -- SK Holdings Co. Vice Chairman Chey Jae Won, the second-ranking executive at South Korea’s third- largest industrial group, was arrested today on suspicion he embezzled money from company affiliates.

The Seoul Central District Court issued an arrest warrant as there is a risk Chey would destroy evidence, Cho Won Kyung, a judge and spokeswoman at the court, said by phone. Chey’s arrest was also broadcast on local television. SK declined to comment in an e-mailed response to Bloomberg News.

Chey, 48, the second son of SK Group founder Chey Jong Hyon, is accused of misappropriating 100 billion won ($87 million) from SK affiliates to make up for futures investment losses incurred by his elder brother and SK Holdings Chairman Chey Tae Won, Yonhap reported today. The elder Chey was also summoned by prosecutors on Dec. 19.

The chairman hasn’t used any company money inappropriately and will prove his innocence, the group said in an e-mailed response to questions from Bloomberg on Nov. 8. The government of President Lee Myung Bak pardoned Chey Tae Won in 2008 of a fraud conviction that had earned him a suspended three-year prison term.

“If this is finished at the vice-chairman level, Chairman Chey can stay in management, which means ongoing M&As and businesses will not be affected much,” said Im Jeong Jae, a Seoul-based fund manager at Shinhan BNP Paribas Asset Management Co., which oversees about $28 billion.

SK’s Businesses

SK Holdings, through its units, has businesses including oil exploration and refining, chemicals, telecommunications and transportation. SK Telecom Co., South Korea’s No. 1 mobile-phone operator, agreed last month to pay 3.4 trillion won for a controlling stake in Hynix Semiconductor Inc.

Prosecutors searched the offices of SK Holdings and other group companies in November to investigate allegations the group’s founding family misappropriated funds.

SK Holdings, the de facto holding company for the group, fell 1.7 percent to 118,500 won as of 10:42 a.m. in Seoul trading while the benchmark Kospi index dropped 0.7 percent.

--Editors: Dave McCombs, Terje Langeland

To contact the reporters on this story: Shinhye Kang in Seoul at; Sungwoo Park in Seoul at

To contact the editor responsible for this story: Richard Dobson at

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