Prosecutors raid Lotte, SK, finance ministry over Choi scandal

Prosecutors raid an office at the Ministry of Strategy and Finance in Sejong, Thursday. The ministry and the Korea Customs Service are suspected of having attempted to give Lotte and SK operating rights of duty free shops after the groups provided large sums of money to two foundations controlled by President Park Geun-hye’s scandal-ridden confidant Choi Soon-sil. / Yonhap

By Kim Bo-eun

Prosecutors raided the offices of Lotte and SK groups in central Seoul, Thursday, over allegations they provided large sums of money to scandal-ridden foundations set up by President Park Geun-hye’s confidant Choi Soon-sil in return for favorable treatment for the groups’ duty free businesses.

Investigators confiscated computer hard disks and documents from the Ministry of Strategy and Finance and the Korea Customs Service (KCS), the two organizations in charge of selecting duty free shop operators.

Prosecutors suspect the groups had provided large amounts of funds to the Mir and K-Sports foundations to curry favor with Choi ― and ultimately Park ― so they could resume their duty free businesses. The KCS is set to announce the winners of the bidding next month.

Both Lotte and SK had been seeking to re-apply for their duty free licenses after being eliminated from a re-approval evaluation last November.

The finance ministry in March announced measures to ease the approval requirements for duty free licenses. In April, the KCS announced it would open four new duty free shops in Seoul and put out a notice in June. While the government’s initial principle was to give a disadvantage to market-dominant bidders, this factor was omitted in the notice, raising suspicions it was attempting to provide an edge for conglomerates.

The announcement came after the groups provided funds to the Mir and K-Sports foundations ahead of their launch in October 2015 and January this year, respectively.

Prosecutors are focusing on the fact that Park held private one-on-one meetings with SK Chairman Chey Tae-won and Lotte Chairman Shin Dong-bin in February.

SK had already provided a total 11.1 billion won to the foundations and Lotte forked over 4.9 billion won. After the private meetings, the K-Sports Foundation requested an additional 8 billion won from SK and 7.5 billion won from Lotte.

Lotte sent 7 billion won to the foundation in May right before the prosecution began a probe into the group’s alleged irregularities. However, the money was returned promptly. SK did not send additional funds to the foundation after negotiation over the amount failed.

If the allegations are proven true, Choi and other involved government officials face bribery charges.

In the meantime, the prosecution summoned former Health and Welfare Minister Moon Hyung-pyo for questioning over allegations he pressured the National Pension Service (NPS), which was a shareholder of Samsung C&T and Cheil Industries, to vote for their merger last year.

The merger was designed in favor of Cheil, in which the Samsung owner family held considerable stakes. It is suspected the government pressured the NPS to do a favor for Samsung, which donated the most to the Mir and K-Sports foundations. Moon is suspected of having led the government pressure.

The prosecution also questioned former NPS Chief Investment Officer Hong Wan-seon, Wednesday night, who led the vote for the merger of the Samsung units.