Published : Sept. 26, 2016 - 15:57
South Korean prosecutors requested a warrant to arrest Lotte Group Chairman Shin Dong-bin on Monday as the criminal investigation into alleged corruption at Korea’s fifth-largest conglomerate nears its climax.
The Seoul Central District Prosecutors’ Office said it has asked the local court to issue an arrest warrant for the group’s highest-ranking executive on charges of embezzling and misappropriating some 170 billion won ($154 million) over the past decade.
Lotte Group chairman Shin Dong-bin arrives at the Seoul Central District Prosecutors` Office on Sept. 20 to answer questions about his alleged wrongdoings involving the group`s finances. (Yonhap)
The 61-year-old Lotte chairman is suspected of overseeing a series of illegal inter-affiliate transactions as well as being involved in the creation of several slush funds worth tens of billions of won through Lotte’s core units.
Shin, alongside other members of the Lotte founding family, is also charged with reaping as much as 10 billion won in gains, simply by being listed as a board member of Lotte’s Korean and Japanese affiliates, without fulfilling any substantial responsibilities.
Lotte Group released a statement Monday expressing “regret” at the prosecution’s recent request and pledged to “fully appeal to the court during the arrest warrant hearing and await the court’s wise decision.”
The Seoul Central District Court is expected to hold a hearing Wednesday to determine the validity of the prosecution’s arrest warrant request, according to local news reports.
The business tycoon was summoned for questioning last Tuesday, fueling speculation that the incumbent chairman would soon be indicted.
At the time, Shin had reportedly denied most of the allegations against him, according to local reports.
Shin’s detention, if permitted, would deal yet another blow to the embattled Korean-Japanese retail giant, which has been under heavy investigation for embezzlement, breach of trust and tax evasion since June.
The probe led Lotte to scrap its plans for a $4.5 billion initial public offering of the group’s hotel unit Hotel Lotte and halt its push to expand its business globally through strategic mergers and acquisitions.
If the chairman is indicted, Lotte Group is likely to experience a prolonged vacuum in management. Currently, there are neither close associates nor children that could replace Shin in a possible absence.
Lee In-won, the group’s No. 2 man and one of Shin’s closest aides, was recently found dead in an apparent suicide caused by the ongoing investigation. Nearly all of the other high-ranking executives close to the chairman are currently under investigation as well.
Meanwhile, local reports say prosecutors will soon indict other members of the Lotte founding family without detention on charges of tax evasion and embezzlement.
This includes the Lotte Group founder Shin Kyuk-ho, his oldest son Shin Dong-joo, and his common-law wife Seo Mi-kyung.
The incumbent Lotte chairman’s sister Shin Young-ja was indicted and taken into custody on charges of corporate malpractice and embezzlement in July. She was the first member of the group’s founding family to be criminally charged as part of the ongoing probe.
By Sohn Ji-young (jys@heraldcorp.com)