South Korea’s prosecution has embarked on an investigation on Lotte Group upon suspicion that the conglomerate accumulated slush funds amounting to billions of won through complicate cross-affiliate transactions.

The Seoul Central Prosecutors’ office said that prosecutors raided 17 locations including the Lotte Group’s headquarters in Sogong-dong, seven affiliates and the homes of key executives on Friday morning. Prosecutors reportedly crashed into the 34th floor of Hotel Lotte, Lotte Group’s founder Shin Kyuk-ho’s office, and the Pyeonchang-dong home of the group’s chairman Shin Dong-bin, suggesting the gravity of the probe.

Lotte has become a regular name on the prosecution scene. Shin Young-ja, the eldest daughter of Lotte Group founder Shin Kyuk-ho, is under probe for taking bribes in exchange for a placement for a cosmetics brand in downtown Lotte duty free shop. The news also would deal as further blow to the group and its plan on the initial public offering of Hotel Lotte which has been delayed upon implication of a family member in corruption scandal.

About 200 prosecutors and investigators reportedly confiscated computer hard drives, accounting books and other documents about financial transactions. They also have placed travel bans on several important figures of the group including vice chairman surnamed Lee, according to the prosecution.

An unnamed official at the prosecution office said that they are suspecting that the group created slush funds by capitalizing on the complex financial transactions among affiliates. He hinted criminal charges on embezzlement and breach of duty against key figures of the conglomerate.

The prosecution reportedly found some suspicious transactions record of the group’s affiliates including Hotel Lotte, Lotte Department Store, Lotte Shopping and Lotte Mart, and is probing whether the owner family members have pocketed the money.

Lotte Group came under prosecution probe on a number of corruption charges since the beginning of this year. Speculation has been mounting that the group was favored by the previous Lee Myung-bak administration when it received approval to build the controversial Lotte World Tower and set foot in the beer market. Some said that the current investigation might extend to target some of the top officials of the Lee administration.

By Lee Hyun-jung

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]