Lotte Group suspected of dubious transactions involving paper company

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• published: 21 Jun 2016
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롯데, 베트남서 페이퍼컴퍼니 이용 '수상한 투자' Moving on to the ever-growing crackdown on Korea's fifth-largest conglomerate... Seoul prosecutors have issued an arrest warrant for a former executive at one of Lotte group's units who is suspected of destroying evidence. This builds on an ongoing probe into allegations of the group's slush funds. Our Kim Min-ji has been following this story from day one... she brings us the latest. Seoul prosecutors have issued an arrest warrant for a former executive at one of Lotte Group's business units. The ex-official of Lotte Chemical is suspected of destroying evidence that could provide clues to allegations of the group's slush funds. This is the first arrest warrant since the probe was launched on June 10th. The man is believed to have destroyed paperwork which he had kept with him since he retired in 2013. Much of the focus of the investigation has been on Lotte Chemical -- also known as the cash cow of the group. The chemical arm is suspected of using another Lotte company in Japan to buy raw materials... in order to inflate prices,... and then used the extra cash either to create slush funds or transfer those funds back to the Japanese unit. Lotte Chemical has brushed off the allegations,... saying no other company was involved and there were no such orders from Lotte Group. The probe has also shed light on Lotte Group's suspicious transactions in Vietnam involving a paper company. In 2014, Lotte invested some 400 million U.S. dollars to establish Lotte Center Hanoi -- a 65-storey complex with a five-star hotel and apartments, a department store and offices. While the complex was being built,... Lotte Asset Development -- the group's property development arm -- bought a paper company named Coralis for about 60 million dollars. Later, Lotte Shopping and Hotel Lotte each bought 45 percent of the shares of the paper company -- leaving Lotte Asset Development with just 10 percent. The combined book value of the three units' shares is roughly 100 million. But last year, the paper company posted a net loss of about 50 million dollars -- and Lotte was criticized for going ahead with the business project while bearing the financial burden. Prosecutors are looking into whether Lotte Group used the special purpose company to inflate the losses... and whether it used the extra money to set up slush funds for the owner family -- allegations the group denies. Kim Min-ji, Arirang News. Visit ‘Arirang News’ Official Pages Facebook(NEWS): http://www.facebook.com/newsarirang Homepage: http://www.arirang.com Facebook: http://www.facebook.com/arirangtv Twitter: http://twitter.com/arirangworld Instagram: http://instagram.com/arirangworld