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Trouble at the chaebol


Billions of dollars have gone missing from the coffers of a major conglomerate, allegedly channelled into criminal slush funds, reckless futures speculation and other as yet unexplained causes. Key members of the family-controlled management have been convicted of accounting fraud and imprisoned. Upon release, they are back to work at the helm of the same company they defrauded, as if nothing had happened.

Sounds like an implausible plot from a pulp-fiction thriller? Not in Korea. For shareholders in oil refinery SK Corp, it's reality. And it is looking increasingly likely that this tale might not have a happy ending.

One shareholder, SK Corp's largest single investor, is not giving up without a fight.

James Fitter, CEO at Sovereign Asset Management, says: “We went into this 18 months ago in the belief that after Roh Moo-hyun's

inauguration as president of Korea, chaebol reform was going to get a tailwind, not face a headwind.”

That has clearly not happened. Despite government attempts to clean them up, Korean businesses are still dominated by family-controlled chaebols, or conglomerates, some of which have been party to egregious cases of misgovernance and even criminal activity.

Almost since it first invested in SK Corp, Sovereign, which owns a 14.9%

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