Resolutions aimed at promoting commonsense ethical standards at SK Corp
Sovereign, whose subsidiary companies own a stake of 14.9%, is committed to SK Corp realising its full potential to become Asia's leading energy company.? Sovereign's resolutions are aimed at protecting shareholder interests by suspending any person charged with a serious criminal offence and barring any person convicted of a serious criminal offence from acting as a director.
This change would bring SK Corp into line with practice at its affiliate company, SK Telecom, which already has a provision prohibiting a convicted individual from sitting on the board of the company. It also brings SK Corp into line with existing Korean legal requirements concerning the eligibility of outside directors. Without the proposed resolutions, a lower standard would continue to apply to executive directors than outside directors.
The decision to requisition an EGM comes seven months after SK Corp's AGM in March 2004. Following that meeting, Sovereign called for the Board of SK Corp to address a series of fundamental issues holding back company performance. Despite the Board's public proclamations of a new commitment to become transparent and to commence responsible management, these important questions remain unanswered.
In June Sovereign met with representatives of the Board of SK Corp further detailing issues of concern. Responses to most of these questions have been, at best, evasive.
James Fitter, Chief Executive of Sovereign, said, "During the past seven months we have given the Board ample opportunity to address the serious issues that were raised following the AGM in March. By its lack of willingness to acknowledge these vital concerns, the Board has shown its true intentions; it is incapable of addressing serious impediments to the healthy functioning of the company.
"Changes to corporate governance at SK Corp have been purely cosmetic and outwardly-focused openly intended to generate public sympathy. SK Corp has not focused its efforts on optimising its allocation of capital, but rather on public relations exercises designed to rehabilitate the image of its senior management and divert attention from the central issue of strengthening the business going forward."
Despite being the second largest oil refiner in the world SK Corp remains bottom of the valuation league compared to its industry peers. Sovereign believes that the outstanding issues surrounding governance and leadership are a significant hindrance to the company achieving greater value recognition and increased investor support.
"Our resolutions are now focused on the issue that we believe is at the heart of concerns surrounding the Company: that of the true ethical standing and competence of its leadership. We believe shareholders need to ask themselves whether any individual convicted of a serious criminal offence should be permitted to direct a public company, and be entrusted with the public's money. Ethical and competent leadership remains the single most significant requirement to ensure positive change."
Sovereign once again calls on SK Corp to demonstrate its commitment to real change. Adopting these resolutions is a prerequisite if SK Corp is to meet its declared aim to meet international corporate governance standards and ensure responsible management.
SK Corp is a company with enormous potential, but it must build a b foundation of good governance for its future, in order to create lasting value for the community and for shareholders. Sovereign remains committed to assisting SK Corp to achieve these goals.
NOTES TO EDITORS
1. For further information concerning the 'Unfinished Business' at SK Corp, please refer to the Latest News section of Legatum's web site (http://www.legatum.com/).
- ENDS -
