The Korea Herald

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SK tries to keep calm over probe

By Korea Herald

Published : Nov. 9, 2011 - 16:39

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SK Group has come under pressure once again to explain a string of scandals surrounding its chairman Chey Tae-won and his younger brother and vice chairman Jae-won after prosecutors raided the conglomerate’s headquarters in Seoul on Tuesday.

Investigators are trying to untangle a web of suspicion involving the chairman’s 100 billion won ($89.4 million) loss from futures trading, group subsidiaries’ 280 billion won investment in a financial firm owned by a former executive and an alleged slush fund created by the Cheys.

Group officials denied the allegations after the raid, but said the company will cooperate with the inquiry.

“Our business is as usual,” an SK official told The Korea Herald. “I haven’t heard (the investigation) would affect our operations.”

In the wake of the scandals engulfing Korea’s third-largest corporation, its major subsidiaries suffered drops in their stock prices.

Shares in SK Holdings, the group’s de facto holding firm controlled by its founding family, the Cheys, plunged 2.76 percent to 141,000 won on Wednesday after a slight rebound in the morning.

Most units including SK C&C, SK Gas, SK Networks, SK Broadband and SKC saw two-day falls in their stocks. Three affiliates ― SK Innovation, SK Telecom and SK Chemicals ―gained a bit, however.

Some analysts say even though such reaction in the market is inevitable for the time being, the prosecution is not likely to exert a big impact on the group’s business in the long-term.

“The investigation is about the executives’ personal misdeeds rather than irregularities in the group’s operations,” said an economist at a local brokerage who wished to remain anonymous.

“Even if they get convicted, they’ll have to make compensation themselves so it wouldn’t affect the company’s overall financial value.”

By Shin Hyon-hee (heeshin@heraldcorp.com)