LOTTE CHAIR GETS JAIL FOR EMBEZZLEMENT
But conglomerate avoids leadership vacuum after court suspends jail time for 2 years
ACOURT found Lotte Group chairman Shin Dong-bin guilty of breach of trust and sentenced him to 20 months in prison yesterday, suspended for two years, leaving him free to try and revive the conglomerate after steep losses in China.
The Seoul Central District Court cleared the executive of some counts of breach of trust and also of embezzlement.
“I apologise to the public,” said Shin as he left court, without commenting further.
The ruling will come as a relief to the group at the end of a difficult year, during which it became the highest-profile corporate victim of a Beijing-Seoul spat over South Korea’s installation of a United States missile defence system.
“We respect the court’s decision. Lotte Group executives and employees will further unite to contribute to economic progress and do our best to meet our social responsibility,” said Lotte, which is South Korea’s fifth-largest conglomerate.
Shin is the subject of another ongoing trial related to a bribery scandal involving former president Park Geun-hye.
Prosecutors are seeking a fouryear jail term and a fine of seven billion won (RM26.49 million).
In the meantime, yesterday’ s ruling means Lotte, with 110.8 trillion won worth of assets, avoids a leadership vacuum for the time being as it navigates mounting China losses and an uncertain recovery.
Shunned in China, its key market, after it was pressed by Seoul to provide land for the Terminal High Altitude Area Defence missile defence system, Lotte’s third-quarter China hypermarket sales were nearly wiped out to about US$278,000 (RM1.13 million) from around US$264 million a year earlier.
Nearly all Lotte Mart stores in China have been shut for much of the year with local authorities citing fire safety issues, and the group has now put the business up for sale.
But the sale was likely to be delayed past the end-year deadline Lotte had sought, said Lotte official Choi Min-ho.
Lotte’s businesses in South Korea, including its duty-free operations that had counted on Chinese tourists, remain under pressure amid curbs on Chinese tour groups travelling to the country.
South Korea’s credit rating agencies have downgraded or cut their outlook for corporate bonds of the group’s flagship retailer Lotte Shopping and Hotel Lotte, citing hurdles in improving their financial stability.
Lotte, which shelved plans for an estimated US$4.5 billion listing of Hotel Lotte amid the investigation, is now battening down the hatches as a difficult year draws to an end.
Lotte Shopping had frozen wages for its department store business this year for the first time since 2009, said three Lotte officials this week. Reuters