Lotte head vows to work hard for transparent corporate governance

By Park Sae-jin Posted : October 25, 2016, 13:41 Updated : October 25, 2016, 13:41

Lotte Group head Shin Dong-bin and other executives make a bow of apology at a news conference. [Namgung Jin-woong = timeid@ajunews.com]



The head of South Korea's fifth-largest conglomerate Lotte Group vowed Tuesday to push actively for reforms, admitting untransparent  corporate governance has led to an investigation by prosecutors. 

Lotte Chairman Shin Dong-bin said he would push again for the delayed initial public offering (IPO) of Hotel Lotte in charge of duty-free operations, as part of efforts to ease the group's complex cross-shareholding structure.

The IPO was delayed at the height of an investigation by prosecutors in June, dealing a blow to the group's campaign to refresh its image tainted by a family feud.

"I feel deeply responsible for failing to work actively on corporate reforms," he said at a news conference together with the chiefs of major subsidiaries.  The group has listed just eight companies in South Korea with its shadowy business structure linked to unlisted units in Japan.

A committee of outside experts will be set up to lead corporate reforms, Shin said, promising to invest 40 trillion won (35.4 billion US dollars) in the next five years.

Last week prosecutors indicted the group's ailing founder, Shin Kyuk-ho, and his two sons, wrapping up a four-month probe into tax evasion, embezzlement, and other irregularities by group executives.

The three were not detained physically but they will be put on trial with the founder's third wife, Seo Mi-kyung, and his daughter, Shin Young-ja, who was arrested on July 7 on charges of taking kickbacks from a cosmetics firm in return for favorable placement in Lotte's duty-free shops.

The founder was accused of evading gift taxes by handing over shares in Japan-based Lotte Holdings under a borrowed name to a firm owned by Seo and Shin Young-ja.

Prosecutors have brought charges against a dozen incumbent and former Lotte executives. Lee In-won, a Lotte Group vice chairman, killed himself before he turned up for questioning by prosecutors.

Aju News Lim Chang-won
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