[THE INVESTOR] South Korea’s fifth-largest conglomerate Lotte Group is being probed by the Seoul Central Prosecutor’s office on allegations of embezzlement and new discoveries are being dug up.
Prosecutors currently speculate that there could have been 300 billion won ($260 million) worth of embezzled money derived from the acquisition of China-based home shopping network Lucky Pai in 2010, reported a media outlet.
Lotte acquired the then heavily indebted network with funds from its retail arms such as Lotte Shopping and Lotte Home Shopping, accumulating up to 190 billion won.
(Yonhap)
Prosecutors say that the group’s chairman
Shin Dong-bin pursued the acquisition to create slush funds and provide benefits to its units.
An associate for Lotte commented, “The process made us face casualties regarding the M&A, but it was not purposefully done to harm the company nor to create slush funds.”
The retail giant’s merger and acquisition records after 2008 are being thoroughly analyzed by investigators as the group entered a phase of frequent acquisition following Shin’s rise to the position of commissioner in 2004.
The firm acquired KP Chemical Corp. that year, with a 53.8 percent stake, and 14 trillion won in investments were made in 36 corporates from then till 2015.
The process gained momentum from 2008-2012 when President Lee Myung-bak was in office, sparking rumors of the government’s preferential treatment.
Shin Dong-joo, the head of SDJ Corporation and a possible candidate for the group’s leadership, criticized his brother, saying that the current chairman is leading an opaque management through mergers and acquisitions when he should be focusing on manufacturing.
By Jung Min-kyung (
mkj1105@heraldcorp.com)