Lotte founder, two sons indicted for misdeeds

Prosecutors on Wednesday indicted Lotte Group Chairman Shin Dong-bin and his father and older brother on various charges including embezzlement, tax evasion and business malpractice, putting an end to a four-month investigation that caught group insiders by surprise for its far-reaching scale.

But the father and sons were not physically detained, suggesting a relatively low level of legal peril.

The Seoul Central District Prosecutors’ Office indicted Lotte Group Chairman Shin Dong-bin on charges of embezzling 50.8 billion won ($45.2 million) and breach of trust that allegedly cost the group 124.9 billion won. The prosecution requested a pre-trial detention warrant for the 61-year-old CEO, which was rejected by a court on Sept. 29.

Prosecutors claim Shin Dong-bin’s illegal transactions could total a staggering 175 billion won.

But they are facing criticism that they failed to dig up enough evidence to put Shin Dong-bin behind bars before trial. That was considered a barometer of how good their case is.

The investigation began in June, when hundreds of investigators raided Lotte headquarters, its affiliates and executives’ residences.

Prosecutors said the Shin family embezzled Lotte Group money by getting paid handsome salaries by putting themselves on boards of group affiliates, when in fact they had not done any work. Their salaries for different roles are considered embezzlement by prosecutors.

Shin Dong-bin is accused of giving inappropriate stipends worth 50 billion won to his older brother Dong-ju and Seo Mi-kyung, third wife of Lotte founder Shin Kyuk-ho, 94.

Shin Dong-ju, former vice president of Lotte Holdings, was indicted on charges that he received illegal allowances worth 40 billion won from the group in a shady business deal overseen by his brother Dong-bin. Seo Mi-kyung is facing the same charge for receiving allowances from Lotte Group. Group founder Shin Kyuk-ho is accused of gift tax evasion worth 80 billion won and breach of trust.

After the prosecution’s indictment of the three Shins, five members of the family that controls Lotte will stand trial for a range of business malpractices that have tainted the image of the country’s fifth largest conglomerate.

Shin Young-ja, the first daughter of Shin Kyuk-ho, was already behind bars after a local court granted a pre-trial detention warrant filed by prosecutors in July when she was charged with embezzlement and business malpractices.

Among the five indicted, only the-74-year-old Shin has been jailed, while Seo Mi-kyung remains in Japan, refusing the prosecution’s demand to answer a summons.

In the course of the four-month investigation, the prosecution hit a stumbling block when Lotte Group Vice Chairman Lee In-won, known as the right hand man of Shin Dong-bin, was found dead in an apparent suicide on Aug. 26, which critics said weakened the possibility of investigators getting to the bottom of the malpractices.

BY KANG JIN-KYU [kang.jinkyu@joongang.co.kr]