Chey Jae-won Elected SK-Enron CEO as SK Shakeup Continues

On October 10, Chey Jae-won (42), vice chairman of SK-Enron and younger brother of SK Group Chairman Chey Tae-won, was elected as the CEO of SK-Enron.

Chey Jae-won had resigned from the post of SK Telecom vice president after a mass resignation of the ownership family was requested last year in relation to accounting fraud and the Sovereign incident.

SK Corp. and Enron founded the 50:50 joint venture SK-Enron in 1999. The joint venture is the holding company of nine city gas companies. As SK Corp. is allowed to exercise management rights after raising its stake in the company to 51 percent, Chey was elected as CEO.

Some say that this might represent a strengthening of the ownership family’s management rights and the start of spin-off of the SK Group.

The vice chairman sold his entire stake in SK Corp., or 596,132 shares (a 0.47 percent stake), in March, and sold 402,770 shares of SK Chemicals (a 2.26 percent stake) to Chey Chang-won (41), his cousin and vice president of SK Chemicals in May. Those moves sparked speculation that he was probably preparing for a spin-off.

Chey Chang-won also currently has a 10.32 percent stake in his company, more than Chey Tae-won (6.84 percent), which he amassed by continuously purchasing the stock this year from Chey Jae-won.

Under those circumstances, some experts view this as the ownership family’s strengthening of individual businesses. They explain that the moves involve Chey Tae-won and Jae-won, sons of the late Chairman Chey Jong-hyun, and Chey Shin-won (53, SKC chairman) and Chang-won, sons of the late Chairman Chey Jong-gun, who is elder brother of Chey Jong-hyun.

However, an SK Group official said, “Chairman Chey Tae-won laughs even at a single mention of the word ‘separation’. It’s more of being a professional manager than of separating the company.”

The official also said, “The stakes Vice Chairman Chey Jae-won sold were what he purchased despite financial burden to protect management rights against Sovereign,” adding, “The group’s official comment is that there is no plan for spin-off of the ownership family.”

Rearrangement of Affiliates Based on Selection and Concentration-

On October 7, SK Chemicals established a new company, SK Petrochemicals, by separating its petrochemical business. That is aimed at enhancing management performance by separating the petrochemical business, which creates lower value-added product, compared with fine chemicals and bioscience businesses.

The rearrangement of affiliates started in a full swing in the SK group this year.

After the acquisition of SK Pharma by SK Chemicals in April, SK Life Insurance was sold to Mirae Asset in June, and SK Securities is also searching for a possible buyer. SKC established SK Mobile Energy in August by separating its secondary battery business.

SK said that it would rearrange affiliates with a focus on businesses that can secure the basis for growth. The company is planning to set energy and communications businesses as its twin business pillars and continue to separate less competitive businesses.

SK Corp. is expected to acquire Inchon Oil Refinery this year, change the name into one affiliated with SK, and run it as a separate company. As many SK employees are slated to move to Inchon Oil Refinery in the near future, a considerable organizational change within the group is also predicted.

Sun-Mi Kim Sang-Soo Kim kimsunmi@donga.com ssoo@donga.com