Prosecutors summon Lotte chairman’s sister

Prosecutors said Thursday that Shin Young-ja, 74, the executive director of the Lotte Scholarship Foundation, will be summoned today for questioning over suspicion that she had received bribes from former Nature Republic CEO Jung Woon-ho.

The eldest daughter of Lotte Group founder Shin Kyuk-ho is accused of having accepted some 1.5 billion won ($1.3 million) from Jung in return for allowing Nature Republic to open its doors in the Lotte Duty Free Store. Furthermore, she allegedly gave privileges to the popular Korean cosmetic brand by ordering that its brand shops be placed at more strategic locations.

Although Shin Young-ja is no longer at the forefront of the conglomerate’s management following the end of her tenure as president of Lotte Shopping in 2012, she holds sizable shares across its affiliates including 0.74 percent in Lotte Shopping, 2.52 percent in Lotte Confectionery, 2.66 percent in Lotte Chilsung Beverage and 1.09 percent in Lotte Foods.

Over 100 prosecution investigators descended upon Lotte’s duty-free shops and Shin Young-ja’s home earlier on June 2. Authorities also raided on Tuesday the office and home of a Lotte Scholarship Foundation executive, one of Shin Young-ja’s close aides, to search for evidence.

Prosecutors on June 8 also arrested Lee Hyo-wook, the CEO of BNF Trading, which is owned by Shin Young-ja’s 48-year-old son Jang Jae-young, for destroying evidence in anticipation of search and seizure. The company is a wholesale distributor that supplies Lotte Duty Free Store and Lotte Department Store with foreign fashion and cosmetics brands. According to the prosecution, BNF Trading was the hatchway through which bribes were funneled to Shin Young-ja. Both mother and son are reportedly forbidden from leaving the country.

This will be the first time that the prosecution summoned a Lotte chaebol family member amid the recent investigation into the conglomerate’s alleged corporate embezzlement and business malpractice. The group’s chairman, Shin Dong-bin, who is Shin Young-ja’s younger brother, is currently in Japan.

The widening probe against the entire group has jeopardized most of its business expansion plans for this year, including the 5.7 billion won listing of Hotel Lotte, which was expected to be the biggest public offering in Korean history. Also, the acquisition plan of the U.S.-based chemical company Axiall by Lotte Chemical was withdrawn after the investigation began. About 45 Lotte affiliates have been raided so far.

BY LEE SO-AH [lee.dongeun@joongang.co.kr]