South Korean prosecutors Friday raided the offices of Lotte Group and seven affiliates over allegations of corruption. The move came after the hotel unit of the country’s fifth-largest conglomerate announced the world’s biggest initial public offering this year.
Hotel Lotte Co. Ltd. Tuesday cut the value of its planned IPO to a maximum 5.26 trillion won ($4.56 billion) from 5.74 trillion won and pushed back its stock exchange listing to July after a bribery investigation was launched against one of its directors.
The Seoul Central District Prosecutors' Office said it sent some 200 investigators to 17 places, including the group's headquarters in central Seoul, its major affiliates and the homes of Chairman Shin Dong-bin and other executives, Yonhap News Agency reported.
The hotel unit, TV channel Lotte Home Shopping and key retail unit Lotte Shopping Co. were all raided. Prosecutors were reported saying they confiscated computer hard drives, accounting books and other documents in their asset transactions. Travel bans also have been put out for some of the company’s senior officials.
There have been allegations against some executives of making secret funds by exaggerating unit prices in contracts with their subcontractors. Prosecutors also suspect the group created slush funds while making transactions between its affiliates.
Last week, prosecutors raided the hotel unit and the house of Shin Young-ja, the head of Lotte Foundation and daughter of group founder Shin Kyuk-ho, on allegations of bribery.
This is the latest in a slew of scandals marring the conglomerate after a high-profile succession feud between Shin Dong-bin and his elder brother Shin Dong-joo last year.
A Lotte official told Reuters that Friday’s raids had not been expected. Lotte Group reportedly declined to comment on the reason for the raid, when asked whether it was related to the slush fund allegations.
Shares in Lotte Shopping, which counts Lotte Department Store and Lotte Home Shopping among its units, were down by 1.55 percent when the markets closed Friday.