South Korea's antitrust watchdog is expected to file a petition against Lotte Group founder Shin Kyuk-ho with prosecutors for the false reporting of its overseas affiliates' shareholding, informed sources said Wednesday.

The secretariat of the Fair Trade Commission (has already informed Lotte of the plan for the legal punitive step after a review of the case that happened when Shin was in control of South Korea's fifth-largest conglomerate.


The FTC will soon hold a plenary or sub-committee meeting to make the final decision on whether to bring the issue to prosecutors, according to the sources.

Shin is alleged to have deliberately scaled down his family's stake in Lotte Group on relevant documents submitted to the FTC.

Many of Lotte's affiliates are based in Japan or not listed on the South Korean stock market. A number of problems in the group's governance structure have been laid bare with the ongoing secession feud between Shin's two sons: Dong-bin and Dong-joo.

In its report to the FSC, Lotte categorized its affiliates in Japan, which have shares in South Korean ones, as "miscellaneous shareholders."

As a result, the ratio of the stake held by Shin's family dropped to 62.9 percent from 85.6 percent.

In May, the FTC imposed a fine of 570 million won ($507,000) on 11 affiliates of Lotte Group for the fake disclosure.

Lotte officials in Seoul claimed that it was a simple mistake amid a lack of accurate data before the full-fledged conflict over the managerial rights.

Under the country's fair trade law, companies with assets exceeding 5 trillion won are obligated to disclose stakes held by the company's head and his or her family members in the company's affiliates at home and abroad. (Yonhap)