Aug 08, 2016

    Lotte HQ raided amid tax-evasion allegations


    SOUTH Korean prosecutors raided additional offices of Lotte Group's policy headquarters last week in order to gain evidence regarding alleged tax evasion by group founder Shin Kyuk Ho.

    He is now suspected of evading roughly 600 billion won (S$724 million) of gift taxes while transferring assets to his common-law wife Seo Mi Kyung and their daughter Shin Yoo Mi.

    Prosecutors have collected preliminary evidence from a law firm that counselled Mr Shin during the 2005 transfer, which included 6 per cent of his shares in Lotte Holdings.

    For now, the group has neither confirmed nor denied the allegations.

    The investigators suspect that Mr Shin and his family were able to avoid paying taxes on the transfer by funnelling the transaction through multiple paper companies in the United States, Hong Kong and Singapore.

    Lotte Holdings is the holding company of Lotte's operations in South Korea and Japan.

    Madam Seo and her daughter are expected to be called in for questioning.

    The two women have already been implicated in other allegations against Lotte Group, including making illicit real-estate transactions and receiving special favours in operating concession stands at Lotte Cinema, the group's movie-theatre chain.

    Prosecutors are also pursuing leads on illegal lobbying by the group's home shopping network Lotte Home Shopping in order to be relicensed for operations.

    While facing various suspicions from prosecutors, Mr Shin is also awaiting a court ruling on his need for an adult guardian.

    His younger sister Shin Jeong Sook filed a petition last December claiming that his deteriorating physical and mental health prevented him from sound judgment.

    The court ruling, expected to come on Wednesday, will have a large impact on the fight between brothers Dong Joo and Dong Bin over control of the group.