Lotte Engineering & Construction, a construction arm of Lotte Group, confirmed Monday that it is being investigated by the National Tax Service.

The tax authorities have been investigating the construction firm since March, reviewing its financial statements of the last three years. 


This is the company’s first tax probe since 2010 when it was imposed a fine of around 100 billion won ($87 million) for unfair business practices.

A Lotte E&C official said, “This is just a regular tax audit.” But the probe is seen by market analysts as the government’s increasing pressure on the group’s opaque corporate governance, which surfaced in 2015.

Since the owner family’s power struggle began last year, the group’s five subsidiaries including Daehong Communications, Lotte Foods and Lotteria, were investigated by the tax authorities.

In February, the tax agency restarted an investigation into Hotel Lotte, which had disobeyed the tax probe in 2013, in a bid to review the money flow between the group’s Japanese and Korean subsidiaries.

By Shin Ji-hye (shinjh@heraldcorp.com)