Lotte Duty Free head investigated by prosecutors amid main branch expansion

By Jhoo Dong-chan

Lotte Duty Free has expanded its main branch in downtown Seoul, vowing to rake in trillions of won in sales this year. However, it remains to be seen whether it will achieve its sales target as Shin Young-ja, the head of Lotte Foundation and daughter of group founder Shin Kyuk-ho, faces questioning by the prosecution tomorrow.

According to a Lotte Duty Free official, Wednesday, the 12th floor food court of its main branch located in the Lotte Department Store in Myeong-dong has been renovated into duty-free space to accommodate more brands, reopening on June 18.

An official said the company aims to see 2.78 trillion won ($2.38 billion) in sales this year with the expansion of its main branch, which now stocks more cosmetic and perfume brands including Darphin, Tom Ford, Urban Decay, Son & Park, Clio and Age 20’s.

In a bid to maintain its competitiveness against rival Shinsegae Duty Free, the nation’s largest duty-free operator is believed to have carried out the expansion to attract more Chinese tourists.

Another reason for the expansion is that its second branch at Lotte World Tower in Jamsil, southeastern Seoul, failed to receive approval from the government and shut down its sales operations for Korean nationals last November.

Lotte Duty Free has applied for re-approval for its Jamsil branch, but it remains unclear if the government will give the company a business license due to a series of unfavorable factors involving Lotte Group’s owner family.

According to Seoul Central District Prosecutor’s Office, Wednesday, it will call in Shin Young-ja, who also helms Lotte Hotel, for questioning on suspicion of bribery, Friday.

Prosecutors are investigating allegations that Shin received bribes from disgraced former Nature Republic CEO Jung Woon-ho, in exchange for space in the Lotte Duty Free store. The total kickbacks reportedly were 1 billion won, which was delivered via a company owned by Shin’s son.

Prosecutors reportedly secured statements from company officials alleging that Shin issued orders to provide not only floor space but various favors to Nature Republic at its duty-free store.

Lotte Group Chairman Shin Dong-bin is currently in Japan for a group shareholders’ meeting and may also face prosecution questioning upon his return to Korea.