Lotte Tour chief executive Kim Ki-byung has been indicted without detention on charges of tax evasion.
According to the Seoul Central District Prosecutors’ Office, Kim is suspected of having evaded 47.6 billion won in gift taxes when transferring ownership of 1.85 million Lotte Tour shares to his two sons.
Lotte Tour is independent of Lotte Group, but Kim is married to the younger sister of Lotte Group chairman Shin Kyuk-ho and Dongwha Duty Free CEO Shin Jung-hee.
Kim’s sons ― Kim Han-sung and Kim Han-joon ― hold executive posts within Lotte Tour and Dongwha Duty Free. The two junior Kims have paid 62 billion won in taxes and fines arising from the transaction.
According to sources, Kim took illicit measures to avoid paying the gift tax when transferring the ownership of the stocks valued at 73 billion won ($65 million) to his two sons.
The stocks had been held under the name of an executive of a subsidiary of Kim’s company until 1998. The Lotte Tour CEO took ownership of the stocks in 1998 before retransferring ownership, on paper, to executives in his company.
In 2008, Kim submitted falsified documents to the National Tax Service to show that the shares were in fact held by his sons.
At the time, the tax office fined two executives of the company 23 billion won for their part in transferring the 73 billion won worth of stocks to Kim’s two sons without paying gift taxes.
However, the decision was retracted based on Lotte Tour’s claims that as the illegal transactions took place in 1978, the 15-year statute of limitations on taxation had run out.
The case was reopened after the Board of Audit and Inspection found the retraction to be inappropriate, and the case was deferred to the prosecutors’ office last year after the NTS issued a 62 billion won fine.
