[THE INVESTOR] Lotte Group founder Shin Kyuk-ho, 94, was found to have evaded billions of won of taxes when bequeathing stakes in Lotte Holdings Japan to his third wife and their daughter.

Lotte Holdings serves as Lotte Group’s global headquarters, with offices in Seoul and Tokyo. 

 

The Supreme Prosecutors’ Office said on Aug. 5 that Shin failed to pay 600 billion won (US$537.06 million) in taxes when he handed over a 6 percent stake to Seo Mi-kyung, who he is in a common-law relationship with, and their daughter Shin Yu-mi. The stake was given via an overseas paper company. Lotte Group was found to have set up paper companies in four countries including the US, Hong Kong and Singapore in 2005. 

The prosecution also searched the offices of Lotte Group's policy division, which serves as the company's management control tower. Authorities believe the department played a part in the irregularity.

The prosecution is planning to soon summon Seo and Shin for questioning. So far, Shin Young-ja, the daughter of the Lotte founder and sister of current Lotte Group Chairman Shin Dong-bin, has been arrested for embezzlement and other charges of corporate malfeasance. 

The country’s fifth-largest conglomerate has been under investigation since June this year for corporate irregularities. 

At the same time, the group is suffering from a power struggle between the chairman and his older brother Shin Dong-joo.

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