The widely reported comments on June 6, 2003 attributed to Mr. Kim Seung-yu, president and chief executive of Hana Bank, that shareholders are only speculators, and that their interests can be ignored clearly reflects the attitudes of the past which have led to the current problems facing SK Global. When the well respected leader of a major Korean bank can publicly suggest that managers of corporations are free to act without regard to the interests of shareholders, he is totally contradicting the spirit and the provisions of the Korean Commercial Code regarding shareholders' ownership rights, and wilfully encouraging company managements to ignore their legal and commercial responsibilities in managing a joint stock company. Inevitably, such careless and irresponsible statements will undermine the credibility of Korean companies and financial markets in the eyes of both domestic and international investors.
It is time for the creditor banks of SK Global to recognise their own responsibilities regarding their earlier lending decisions to a company with a current negative equity value of KrW4.4 trillion. Clearly, there was a fundamental weakness in their risk evaluation process, which permitted such loans to be made. Recognising these mistakes will result in damage to their balance sheet and it is understandable why they would wish to minimize this loss. However, the recent efforts by the creditor banks to bail out SK Global and pass the burden of their lending errors onto the shareholders of SK Corporation is highly inappropriate and unworthy of a mature financial market.
The decision to participate in the bail out of SK Global belongs to SK Corporation and no evidence has yet been presented showing that the continued operation of SK Global is in the interests of SK Corporation or its shareholders. Neither the self-appointed "SK Group" members, nor SK Global creditors, have the right or authority to spend SK Corporation money and this is why the law provides for a company's board of directors to be accountable to its shareholders, not its friends, family or financiers.
Sovereign has every confidence that the board of SK Corporation does not share Mr. Kim Seung-yu's views and looks forward to continuing to support SK Corporation's stated objective "to establish a world-class corporate governance and transparent management led by the board of directors in order to maximize shareholder value" (source: SK Corporation web-site, 19th March, 2003).
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