South Korean Prosecutors Indict Lotte Executives for Corruption

South Korean Prosecutors Indict Lotte Executives for Corruption

South Korean prosecutors have indicted 22 individuals for corruption within Lotte Group — the country’s fifth-largest conglomerate. The individuals include Founder Shin Kyuk-ho, Chairman Shin Dong-bin, their family members, and two entire group units.

The corruption probe went public this June. Seoul Central District Prosecutors’ Office released the results in a statement mid-October.

An Overview of the Issue

South Korean prosecutors indict the following individuals on embezzlement, tax evasion, and other charges:

  • Shin Kyuk-ho (Lotte Group’s founder);
  • Shin Dong-bin (Lotte Group’s current chairman and the founder’s son);
  • The founder’s mistress; and
  • The founder’s two other children.

Seoul Central District Prosecutors’ Office said that the family members allegedly evaded a combined total of $76 million in taxes. The prosecutors also said that the family members allegedly embezzled $46 million of company funds. Furthermore, the family’s outsized influence incurred $123 million worth of losses for Lotte companies.

Apart from the influential family, prosecutors also indicted other individuals for corruption within Lotte Group.

Accusations against the Chairman

Prosecutors accused Chairman Shing Dong-bin of alleged embezzlement and fiduciary duty. They say his actions cost the group of companies millions. As such, the Lotte chairman has become the most prominent Korean business man to face trial since the chairman of SK Group went to jail for embezzlement in 2013.

The indiction of Lotte executives is one of South Korea’s largest corruption probes in recent years. The chairman’s father — and Lotte Group’s founder — and his brother face alleged financial crimes as well.

Allegations against Other Lotte Executives

Lotte has faced numerous crises in the past year, starting with the very public family feud that led to a failed boardroom coup. Evidently, not all the allegations directly link to the current chairman. Some involve instances that occurred when the founder was still in charge of the group of companies. Moreover, other members of the Shin family are responsible for some events.

For example, Korean authorities arrested the chairman’s elder half-sister Shin Young-ja back in July for allegations of bribery and embezzlement. Although she insistently denied the charges, she has resigned from her board position at Hotel Lotte and Busan Hotel Lotte.

In other news, prosecutors temporarily halted the investigation of corruption allegations in August because Lotte Group’s vice chairman was found dead hours before his scheduled questioning.

After the recent indiction of Lotte executives for corruption, a spokesperson for Lotte Group said that they will explain the issues that the prosecution deems problematic.