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Lotte, SK raided in probe of duty-free foul play

Prosecutors on Thursday morning raided 10 offices, including those of Lotte, SK, the Korea Customs Services and the Ministry of Strategy and Finance, in its investigation of suspected foul play in the companies’ bid for duty-free licenses.

Lotte headquarters in Seoul (Yonhap)
Lotte headquarters in Seoul (Yonhap)

The Finance Ministry and the Customs Service are responsible for deciding which corporations receive licenses to operate duty-free stores here. This is the first time in ten years that the Finance Ministry has been raided by prosecutors.

According to reports, prosecutors are investigating whether Lotte and SK lobbied government agencies or provided funds for the Mir and K-Sports Foundations, controlled by President Park Geun-hye’s confidante Choi Soon-sil, in exchange for influence-peddling in the duty-free bidding process to revive their lost licenses.

SK‘s affiliates contributed a total of 11.1 billion won ($9.4 million) to the two foundations, while Lotte contributed 4.9 billion won. Representatives of the two corporations -- SK’s Chey Tae-won and Lotte‘s Shin Dong-bin -- were questioned earlier this month for their informal personal meetings with President Park Geun-hye last year. 

In March, the Finance Ministry announced that it would be alleviating requirements for companies seeking duty-free licenses. In April, the Customs Service decided to allocate four new duty-free licenses, sparking suspicions whether the measure was in favor of specific companies. 

The government is expected to issue four new duty-free licenses next month. Five large corporations including Lotte and SK are vying for the three spots allocated to conglomerates. 

“There is nothing really to explain,” said a Lotte spokesman. “The contributions that we made to Mir were motivated purely by the fact that Mir’s objectives coincided with Lotte‘s efforts for the development of cultural content. We had already lost the license at that point. There is no connection.”

There were also rumors that high-ranking officials at Lotte had met with then-finance minister Choi Kyung-hwan regarding the license for their duty-free outlet at Lotte World Mall. Choi has categorically denied these allegations through a statement.

By Won Ho-jung (hjwon@heraldcorp.com)

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