South Korean prosecutors yesterday said they had indicted Lotte Group founder Shin Kyuk-ho, his mistress and all of his three children on embezzlement, tax evasion and other charges.
Lotte’s 94-year-old founder, group chairman Shin Dong-bin, 61, and others together allegedly evaded a total of US$76 million in taxes and embezzled US$46 million of company funds, the Seoul Central District Prosecutors’ Office said in a statement.
Three others are the founder’s eldest son, Shin Dong-joo, 62, his daughter Shin Young-ja, 73, and his 57-year-old common-law wife, Seo Mi-kyung.
Photo: EPA
The prosecutors said the Shin family members also incurred US$123 million of losses to Lotte companies as the family used their outsized influence to control corporate funds and to make decisions favorable to them, not to shareholders.
When Lotte sold its businesses to the founding family members, they were sold at prices way below market value, but when Lotte bought businesses or stocks from its founding family, it had to pay premiums, prosecutors said.
For example, Lotte sold its lucrative popcorn business at its movie chains to the founding family members, allowing them to monopolize the profits from selling popcorn to moviegoers. The profit should have gone to Lotte Shopping, which operates one of the biggest movie theater chains in South Korea, the officials said.
Lotte also paid a total of 50.8 billion won (US$45 million) as salaries from 2005 to this year to two of the founder’s children, even though they did not hold any positions or have any duties with the company.
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