Lotte chief indicted for embezzlement
Four-month corruption probe ends with a whimper
By Jung Min-ho
Shin Dong-bin, chairman of Lotte Group, comes to work at the group’s head office in Seoul, Wednesday. / Yonhap
Lotte Group Chairman Shin Dong-bin was indicted on charges of embezzlement and breach of trust, the Seoul Central District Prosecutors’ Office announced Wednesday, concluding its four-month corruption probe into the group.
Prosecutors have also indicted Shin Kyuk-ho, the chairman’s father and Lotte founder, and Shin Dong-joo, the chairman’s elder brother, on charges of tax evasion and embezzlement. With Shin Young-ja, the chairman’s sister, and Seo Mi-kyung, the founder’s common-law wife, indicted on similar charges, a total of five members of the Lotte founding family will face trial.
Yet for the prosecution, the results are disappointing, given that more than 20 prosecutors have participated in the lengthy investigation into the allegations of massive slush funds and corruption tied to heavyweight politicians. Evidence shows that their corruption charges are much less than suspected.
The chairman is suspected of allowing his family members to pocket 50 billion won in total from Lotte affiliates. The prosecution also believes that he caused financial damage of 175 billion won to Lotte by supporting his family business within the group.
The chairman has denied all the charges, saying he did not play any active role in the illegal activities.
Initially, the prosecution planned to arrest him. But investigators had to change their plan after the Seoul Central District Court disapproved their request for the arrest warrant on Sept. 28.
Shin Kyuk-ho is suspected of dodging 85.8 billion won in taxes in the process of yielding his shares of Lotte Holdings to his family, including Seo. He is also facing charges of embezzlement and breach of trust.
Shin Dong-joo is facing charges of receiving 39.1 billion won from Lotte’s affiliates for no reason from 2005 to 2015.
Shin Young-ja is facing charges of evading 56 billion won in gift taxes for receiving shares of Lotte Holdings from her father.
Prosecutors believe Seo and her daughter pocketed 50.8 billion won from Lotte affiliates. The two have been staying in Japan to avoid investigation.
Along with the owner family, the prosecution also indicted 14 former and current Lotte executives.
During the investigation, Lotte Group Vice Chairman Lee In-won was found dead hours before he was to face questioning by the prosecution. Some analysts predicted at the time prosecutors would wind down the investigation.
Lotte, which is Korea’s fifth largest conglomerate, vowed to carry out a major overhaul to regain consumer confidence, faced with criticism over shady business practices.
“We will try to fix various problems revealed during the investigation and will faithfully cooperate with the legal proceedings,” Lotte Group said in a statement.
Lotte’s turmoil began last year, when a family feud erupted between Shin Dong-bin and Shin Dong-joo over the group leadership. Since then, Lotte has faced a torrent of regulatory scrutiny and investigations.