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Shinsegae probed over sales of gift vouchers

The Busan Metropolitan Police Agency on Monday said it is investigating Shinsegae Department Store on allegations that its employees illegally sold gift vouchers worth billions of won to ramp up sales performances.

The police have raided Seoul and Busan Centum City offices of the department store and is combing through all financial records related to the gift certificates, officials said.

“It’s still early in the investigation, but we believe the dealings will amount to billions of won,” said Park Gun-hong, head of the financial crime unit at the Busan police agency.

A bigger part of this issue is that the police believe the department store’s top brass must have turned a blind eye to such large-scale illegal dealings.

Shinsegae Department Store is one of the nation’s oldest retail chains run by Shinsegae Corp. whose chairman is Chung Yong-jin. Shinsegae also operates discount store, E-mart.
Chung Yong-jin (Yonhap News)
Chung Yong-jin (Yonhap News)

But the police said it has yet to confirm if the department store accumulated slush funds with the illegal transactions.

Shinsegae spokespeople acknowledged that a police probe was underway, but denied that the company sought to create slush funds.

“There are serial numbers on these vouchers, so there is no way to use them to create illegal funds,” said one Shinsegae official on condition of anonymity.

The employees of Shinsegae store’s sales department allegedly teamed up with the retail and wholesalers to sell them the vouchers in the names of other companies without notifying them.

The identities of up to 30 local firms in a myriad of industries ranging from construction to pharmaceuticals were found to have been “borrowed” by Shinsegae to be sold to the retailers and wholesalers.

The ultimate objective appears to have been to make it look like Shinsegae had been selling more certificates.

The retailers, for their part, reportedly purchased the certificates because they would secure bigger margins if they made the purchases in bulk, and if they buy from larger and better-known firms, rather than mom-and-pop stores.

Up to 10 such retailers in the areas of Seoul, Busan, Ulsan and other provinces that dealt with Shinsegae gift certificates are undergoing investigations, police officials said.

One of the companies whose name is said to have been illegally borrowed by Shinsegae said it sued the department store and the certificate retailers for 10 billion won worth of certificates the store purchased under its name.

By Kim Ji-hyun (jemmie@heraldcorp.com)
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