South Korea’s Lotte, SK groups raided over graft claims

Seoul, Nov 24 (IANS) South Korean prosecutors on Thursday raided the headquarters of Lotte and SK, two of the country’s top five conglomerates, over bribery allegations involving Choi Soon-sil, President Park Geun-hye’s longtime confidante.

Choi has been indicted on multiple crimes, including abuse of power and extortion, Xinhua news agency reported.

The two family-run chaebols are suspected of making donations to two nonprofit foundations controlled by Choi in a bid to be included in four new operators of duty free stores in Seoul that will be finalised by the customs office later this year.

Investigators also stormed the finance ministry in charge of economic policy as well as the customs office in Daejeon.

Choi, whose friendship with Park dates back to the 1970s, has been charged with extorting 77.4 billion won ($66 million) from 53 conglomerates, including Lotte and SK, to establish the Mir and K-Sports foundation Choi actually controls.

SK Group donated 11.1 billion won to the cultural and sports foundations through its subsidiaries, while Lotte’s donations amounted to 4.9 billion won.

Lotte allegedly wired an additional 7 billion won to the K-Sports foundation, but the group got back the money just a day before prosecutors stormed the Lotte headquarters in May for investigation into separate charges.

The K-Sports foundation also demanded an additional donation of 8 billion won from the SK Group, which did not provide it in the end.

Prosecutors are reportedly looking into whether the two conglomerates made donations to the Choi-controlled foundations in an attempt to receive licenses to run duty free stores in Seoul that will be announced next month.

Park had separate, closed-door meetings with SK Group Chairman Chey Tae-won and Lotte Group Chairman Shin Dong-bin earlier this year.

SK and Lotte failed to be among the five new operators of duty free shops in Seoul, which the customs office picked last year. The Korea Customs Service (KCS) announced a plan in late April to designate four more operators later this year.

The announcement came despite rising expectations for poor sales among newcomers. During the January-September period, the new duty free businesses recorded tens of billions of won in operating losses.