Daily Times

SEOUL: South Korea’s Lotte Group said Monday it was scrapping an initial public offering worth almost four billion dollars amid a widening investigation into alleged embezzlement by its founding family. Hotel Lotte — the group’s key unit — had planned to list shares worth at least 4.6 trillion won ($3.9 billion) on Seoul’s main stock market in July. But the firm decided to “cancel all the remaining process” and postpone the IPO due to “recent internal and external circumstances”, according to its regulatory filing. The Seoul-based group, founded in Tokyo in 1948 by Shin Kyuk-Ho, has a vast network of businesses in South Korea and Japan including department stores, hotels and processed food, with combined assets valued at more than $90 billion. But the group — currently controlled by Shin’s son, Dong-Bin — has been rocked by widening probes into the Shin family. They face allegations of embezzlement and creating secret slush funds worth tens of millions of dollars. State prosecutors in recent weeks have raided several Lotte units as well as the homes of Shin family members, accusing them of destroying evidence in an attempt to impede investigations. The group has made headlines since last year because of a bitter feud between the founder’s two sons. Dong-Bin and his older brother Dong-Joo locked horns over the control of the business empire and launched personal and public attacks on each other for months last year. The dispute ended after the group’s board members sided with Dong-Bin but it fanned public resentment at the family-run conglomerates known as “chaebol” which dominate the economy. The chaebol spearheaded South Korea’s stellar growth from the ashes of war to become Asia’s fourth-largest economy. But they have been denounced for ignoring corporate governance norms and running listed subsidiaries with no apparent concern for shareholders. As public criticism grew of the Shin family, the government last November awarded a lucrative licence previously held by Lotte for a Seoul duty-free store to a rival bidder. All nine Lotte subsidiaries currently listed on the Seoul stock exchange dropped heavily on Monday, losing more than one trillion won in combined valuations in one day.