Smells like chaebol bashing

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Smells like chaebol bashing

Korea’s corporate sector is being shuddered at the news that the prosecution has raided affiliates of Lotte Group, the fifth largest chaebol in Korea, to obtain evidence of alleged illegal activities. Political circles carefully watch future direction of the law enforcement agency’s investigation. After Lotte Group became an investigation target following the embattled Daewoo Shipbuilding and Marine Engineering, industry watchers are paying heed to whether the probe will expand to other conglomerates. Some political analysts link the move to the Park Geun-hye administration’s all-out campaign to avert a lame duck situation.

The Seoul Central Prosecutor’s Office on Friday conducted searches and seizures of the policy headquarters of Lotte Group, seven affiliates and homes of its executives. Prosecutors also raided the office of founder Shin Kyuk-ho and the house of Lotte Group Chairman Shin Dong-bin as well as Lotte Shopping, Lotte Hotel, Lotte Engineering and Construction, Lotte Chemical and Lotte Corporation all under its umbrella. The prosecution raided the conglomerate on charge of creating a slush fund through trading assets among its affiliates.

Prosecutors have imposed travel bans on more than 10 executives.

With the latest development, Chairman Shin Dong-bin still in a squabble with his older brother Shin Dong-joo, former vice chairman of Lotte Holdings in Japan, faces the biggest crisis since July 2015. Prosecutors have collected information on the group’s unlawful dealings from the chairman’s brother.

Prosecutors will likelly bring some owner families to justice after probing into how the group established slush fund and used it, including clearing suspicions over the process of the group obtaining permission from the Lee Myung-bak administration for the construction of the Lotte World Tower and Mall, Lotte’s advancement to beer business and expansion of its duty free shops. Political and legal circles anticipate that former senior officials under the Lee government could be targeted for the investigation.

The prosecution must get to the bottom of the case — which triggered national controversy over the possibility of an outflow of national wealth amid a dirty family feud over the control of the group — and clear suspicion on alleged special favors from the Lee government in return for kickbacks. But the top law enforcement agency should not be mired in political disputes over the incumbent government’s chaebol bashing to distract the public from its ongoing impasse.

Prosecutor General Kim Soo-nam must order the district office to investigate Lotte Group as thoroughly as possible. People have vivid memories of the prosecution’s fumbles in the investigation of POSCO last year.

JoongAng Ilbo, Jun. 26
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