Lotte Group chairman summoned over corruption allegations

SEOUL, Sept. 20 (Yonhap) — The chief of embattled South Korean retail giant Lotte was summoned by state prosecutors Tuesday as the high-profile corruption probe into the country’s fifth-largest conglomerate neared its conclusion.

Shin Dong-bin, 61, appeared before the Seoul Central District Prosecutors’ Office as a suspect in a string of charges, including embezzlement and breach of trust. It is the first case in the group’s decades-long history that its chairman has faced questioning as a criminal suspect.

“I am sorry for causing concerns,” he told reporters before entering the prosecutors’ office. “I will fully cooperate with the prosecution’s investigation.”

The business tycoon declined to further comment on the allegations raised against him.

Prosecutors here have been looking into Lotte’s alleged wrongdoings since they launched full-fledged raids into the group’s headquarters in June.

Shin is suspected of orchestrating a series of shady deals between the group’s affiliates in the process of mergers and acquisitions. He is also accused of selling the assets of certain affiliates to others at below market prices, according to prosecutors.

Investigators are now examining if he can be criminally charged with embezzlement on the suspicion of receiving some 10 billion won (US$8.88 million) in yearly stipends just by being listed as a board member of the group’s Japanese affiliates.

Prosecutors said they will also question the chairman over whether he was involved in alleged slush funds valued at some 30 billion won created by the group’s construction arm over the last 10 years.

Since the launch of the investigation, prosecutors have called in a number of high-level executives at Lotte who are suspected of being involved in the massive corruption scheme.

Earlier this month, Shin’s older brother Dong-joo was quizzed over allegations of embezzling some tens of billions of won from the group’s major affiliates.

In the following week, prosecutors carried out the questioning of the brothers’ father and group founder Shin Kyuk-ho at his office in Hotel Lotte in Seoul.

The probe had faced a crisis when Lee In-won, the group’s vice chairman and close aide of the incumbent chief, was found dead in an apparent suicide late last month while waiting for a summons by prosecutors. Although the prosecutors briefly halted their interrogations, they resumed questioning people a few days later.

Lotte, which has sprawling businesses in both South Korea and Japan, has been gripped by a series of scandals since last year, including a bitter feud between Shin Dong-bin and his older brother for managerial control.

The prolonged family feud has effectively been resolved after the founder’s second son and incumbent chief won shareholder support in March to tighten his grip on the business group.

Still, industry watchers say the group’s managerial control could change if a local court issues a warrant to arrest the group chairman over the allegations.

A senior prosecutor, who asked not to be named citing office rules, said the prosecution is carefully examining whether to seek a warrant for the conglomerate chief.

Meanwhile, prosecutors said later on Tuesday that they have started procedures to freeze the assets of Lotte founder’s third wife Seo Mi-kyung in collaboration with the National Tax Service.

Seo, who has been declining to respond to prosecutors’ summons, is suspected of evading some hundreds of billions of won in taxes. She is currently known to be in Japan, according to prosecutors.

Shin Dong-bin (C), the chief of the embattled South Korean retail giant Lotte, bows before entering the Seoul Central District Prosecutors’ Office on Sept. 20, 2016. Prosecutors called in the business tycoon as a suspect as the high-profile corruption probe into the country’s fifth-largest conglomerate neared its conclusion.