Prosecutors launch fresh raid into Lotte Group

By Park Sae-jin Posted : June 14, 2016, 10:43 Updated : June 14, 2016, 10:43

[Yonhap News Photo]


Prosecutors launched a fresh raid Tuesday into South Korea's fifth largest family-run conglomerate, Lotte Group, a day after the group indefinitely put off the planned listing of its hotel and duty-free operating unit.

The raid for the second time for a week was aimed at securing evidence related to alleged corruption and illegal business activities by group executives. After the first groupwide raid last week, prosecutors have questioned group officials.

On Monday the group postponed its plan for the initial public offering (IPO) of Hotel Lotte, dealing a serious blow to its campaign aimed at attracting investments from foreign investors.

Hotel Lotte, a virtual holding company of group units based in South Korea, has tried to expand its duty-free and other businesses. The sudden investigation prompted the group to cancel a series of deal roadshows to be held this month. Initial market estimates on Hotel Lotte's IPO had ranged from 4.6 trillion (3.8 billion US dollars) to 5.7 trillion won.

The group, which has 89 subsidiaries with more than 100 trillion won in assets. is now in a chaotic state, with its control tower in limbo. Shares of group subsidiaries have nosedived.

Prosecutors have delved into a flow of secret funds collected by group chairman Shin Dong-bin and previous irregular deals.

Public concern and resentment have grown over the group's protracted fraternal feud as its ailing founder, Shin Kyuk-ho, 94, was in his dotage without making a clear decision on his successor. The founder's younger son, Dong-bin, now holds the support of South Korean and Japanese shareholders, but his elder brother, Dong-joo, has refused to give up his bid for managerial control of the retail and hotel giant.

Aju News Lim Chang-won = cwlim34@ajunews.com
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