[Yonhap News Photo]
A former Lotte Chemical executive has been arrested for playing a key role in evading taxes amid fresh accusations that South Korea's fifth-largest conglomerate, Lotte Group, is suspected of operating units in overseas tax heavens.
The former financial executive surnamed Kim was arrested overnight. It was the first arrest in a probe into the family-run conglomerate that began two weeks ago.
Prosecutors have tried to find evidence about a secret slush fund created by group executives. The flow of funds used for mergers and acquisitions and other purposes has been scrutinized.
The investigation prompted group chairman Shin Dong-bin to put off the planned initial public offering of Hotel Lotte, a virtual holding company, which has tried to expand its duty-free and other businesses.
The group's protracted fraternal feud has intensified as its ailing founder, Shin Kyuk-ho, 94, was in his dotage. The founder's younger son, Shin Dong-bin, now controls the group, but his elder brother, Dong-joo, has refused to give up his bid for control of the retail and hotel giant.
The group, which has 89 subsidiaries with more than 100 trillion won (862 billion US dollars) in assets, has actively sought mergers and acquisitions. Lotte Chemical has been the group's main revenue source.
Through mergers and acquisitions, Lotte Chemical has become the group's most profitable unit. Last year, the company took over the chemical units of Samsung Group but it scrapped a bid for US-based polyethylene manufacturer Axiall this month due to an investigation by prosecutors.
On Thursday, data released by Korea 20000 Corporate Research Institute, a corporate watcher, showed that dozens of Lotte's overseas subsidiaries are based in suspected tax havens.
Aju News Lim Chang-won = cwlim34@ajunews.com
reporter
Park Sae-jin
swatchsjp@ajunews.com
