South Korean prosecutors asked a court yesterday to approve an arrest warrant for the chairman of the Lotte Group conglomerate on suspicion of embezzlement and breach of trust, a prosecution source with direct knowledge of the matter said.
The arrest warrant request comes after Lotte chairman Shin Dong-bin, 61, was questioned by prosecutors in an investigation that has battered the country’s fifth-largest family-run business group since it became public in June.
It further adds to the uncertainty for the retail-to-chemicals group, which was riven last year by a bitter public feud between Shin and his older brother over who would succeed their father, the 93-year-old founder of the conglomerate.
The investigation into Lotte has already derailed a planned $4.5bn initial public offering by the group’s Hotel Lotte arm, thwarted billions of dollars in potential acquisitions and served as the backdrop of the apparent suicide of one of the group’s top executives last month.
The prosecution source declined to be identified as he was not authorised to speak to media but the Lotte Group confirmed that prosecutors were seeking an arrest warrant and said that Shin will fully cooperate in the probe.
Analysts said the group would suffer if Shin were arrested.
“Under South Korea’s owner-dominated corporate governance structure, daily operations do continue even if the owner is arrested, but major decisions such as investment, M&A and government relationships are greatly affected,” said Park Ju-gun, head of research firm CEO Score.
Shares in the group’s Lotte Shopping Co Ltd fell 1.67% yesterday, worse than the 0.34% drop in the broader market