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Lotte Chairman Faces Prosecutors in Corruption Scandal

Lotte Group chairman Shin Dong-bin arrives at the Seoul Central District Prosecutors’ Office on Tuesday.

The chairman of embattled Lotte Group appeared at the Seoul Central District Prosecutors’ Office on Tuesday to answer charges of embezzlement and breach of trust at the retail giant.
His arrival at the office was broadcast live and saw the younger scion of the dysfunctional owner family apologize “for causing concerns.” He pledged to cooperate fully with the investigation.
The summons came some 100 days after prosecutors raided his home and offices in June. The group in a statement vowed to improve transparency and regain the public’s trust.
Shin was grilled all night. A prosecution source said he was being probed on the broader charges rather than details. The source added that investigators need time due to the “enormity” of corruption in the conglomerate.
Prosecutors suspect Shin of embezzling W200 billion from the conglomerate since he effectively took charge when he became head of strategic planning in 2004 (US$1=W1,121). He denies the allegations.
The prosecution source said, “Some Lotte Group subsidiaries suffered billions of won in losses in stock and asset deals with other affiliates, and these deals were made on Shin’s orders.”
But Shin claims that the affiliates acted of their own accord.
Prosecutors are also investigating charges that Shin ordered Lotte Group affiliates to outsource orders to other businesses owned by the Shin family.
Korea’s family-run conglomerates are nominally public but often still treated as private fiefdoms by the founder families through Byzantine holding structures.
Prosecutors accuse Shin of embezzlement by pocketing around W10 billion in annual pay by merely listing his name on the management roster of a Lotte affiliate in Japan. But Lotte said Shin did visit Japan every month to discharge his duties. Prosecutors have yet to decide whether or not to arrest him.
The conglomerate has been plagued by an ugly feud between the two sons of the nonagenarian founder or over a year. Affiliates have unanimously thrown their weight behind Shin Dong-bin, the younger son, while the older son Dong-joo is allied with his father, who has dementia.

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