Chey Tae-won will no longer be the chairman of SK Group, the company announced on Thursday.

The announcement came after the group released a statement earlier this week, saying Chey would step down from the boards at SK Holdings, the holding unit of the country’s third-largest conglomerate, and its subsidiaries and affiliates, including SK Innovation, SK C&C and SK Hynix.

Chey was recently sentenced to four years in jail for embezzling funds from SK companies to pay for losses incurred from his investments in derivatives.

The group said he would henceforth be referred to as “former chairman,” while remaining the largest shareholder of SK C&C, which holds a 31.8 percent stake in SK Holdings. Chey holds a 38 percent stake in SK C&C, according to a regulatory filing.

The former chairman, who was also found to have taken part in the group’s accounting fraud in 2003, has not appointed any successors or named any insiders for either the board seats he gave up or the group’s top post.

The group is expected to inevitably face a management vacuum for the time being after Chey’s departure for prison, where he is unlikely to be pardoned during the incumbent administration.

President Park Geun-hye had opposed giving special treatment to influential politicians or corporate executives who committed serious offenses. Her policy also included enforcing tough measures against conglomerates violating fair competition laws.

SK Group said the group and its companies are in emergency mode.

“All SK employees will counter the crisis as there will be a significant management vacancy after the (former) chairman’s resignation from his board seats,” the group said in a statement.

It has been said that Kim Chang-geun, the chairman of SK’s Supex Council, the strategic decision-making body of the conglomerate, will run the group and its companies as Chey called on employees to unite under the Supex Council.

“Chey has asked CEOs of SK companies and 80,000 employees to overcome the crisis with the Supex Council in the center, and make SK beloved (again) by the public,” the group said.

SK Holdings rebounded, closing at 190,000 won on Thursday, up 1.06 percent following share buybacks.

The holdings company posted its worst consolidated earnings in the fourth quarter of 2013 due to losses at SK Networks, SK Innovation and SK Engineering & Construction.

By Park Hyong-ki (hkp@heraldcorp.com)