Highlights
■ SK Innovation Board of Directors held an expanded Audit Committee attended by all outside directors on March 10 to review the final decision of the United States International Trade Commission at the Board’s level
■ Audit Committee strongly rebuked SK Innovation’s poor response to the U.S. judicial system due to lack of experience in global disputes
– Ordered system improvement for global dispute response and establishment of an enhanced complete compliance monitoring system through the appointment of outside U.S. experts
■ Audit Committee said, “It is regrettable that the import ban has been imposed due to insufficient response to the U.S. judicial process without having the opportunity to defend the infringement of trade secrets, which is the essence of the lawsuit… Establishing a global level of litigation response and compliance system is urgent and critical.”
■ SK Innovation’s Board of Directors plans to visit the sites, including Daedeok Battery Research Institute, to further review potential issues
SK Innovation’s Board of Directors (Chairman Kim Jong-hoon), Seoul, Korea, has recently taken steps to sort out the stance at the Board’s level on the final decision of the U.S. ITC.
SK Innovation Board of Directors held an expanded audit committee attended by all outside directors on March 10 to separately review the issue in depth. At the meeting, outside directors were briefed by the executives in charge regarding the final decision of the U.S. ITC and commented on it. This means that the SK Innovation Board of Directors, which has the final decision-making power on major management issues, has begun to develop fundamental supplementary measures to prevent the recurrence of similar situations.
SK Innovation had received a ban on imports in the U.S. from the U.S. ITC lawsuit against LG Energy Solution due to alleged document destruction, without even getting a chance to argue about the violation of business secrets.
On the same day, the Audit Committee strongly rebuked SK Innovation for its insufficient handling of the U.S. judicial process due to its lack of experience in global disputes. Also, the Committee ordered a reorganization of the global litigation response system internally and recruitment of external global experts to establish an enhanced complete compliance monitoring system.
As a follow-up action, SK Innovation decided to proceed with the process of appointing outside experts on the global compliance field in the United States to build an advanced compliance monitoring system as soon as possible.
“It is very unfortunate to lose a chance to defend and argue whether there was an infringement in business secrets, which is the essence of this lawsuit, just because we showed an insufficient response to the U.S. judicial procedures,” said Choi Woo-seok, the Chief auditor of SK Innovation’s Board.
In addition, SK Innovation’s Audit Committee received a report on the progress of negotiation, including SK Innovation’s newly proposed negotiation terms and LG Energy Solution’s response. “The Board of Directors will closely review the competitor’s requirements in the future. However, it is impossible to accept any conditions that make SK Innovation difficult to sustain its battery business in the U.S. or significantly reduce its business competitiveness,” said the Audit Committee.
To organize its stance and prepare fundamental improvements on the U.S. ITC lawsuit response system, SK Innovation’s Board of Directors also plans to visit the sites such as Daedeok Battery Research Institute, etc., as soon as possible, for additional review on the main issue.
(*) SK Innovation Audit Committee consists of Choi Woo-seok (Chief auditor, current professor at Korea University Business School), Kim Jong-hoon (Chairman of the Board of Directors, former Trade Minister), and Kim Joon (External director, Chairman of Kyungbang Co., Ltd). It is an audit organization within the board executing separate actions such as auditing, establishment/diagnosis/operation of the internal control system, etc.
