Prosecutors raid SK, Lotte, govt offices, smelling fishy deal behind duty-free license issue

South Korean prosecutors probing the high-profile corruption and power abuse scandal surrounding President Park Geun-hye and her close friend Choi Soon-sil raided Lotte Group and SK Group as well as the government offices of the Ministry of Strategy and Finance and Korea Customs Service (KCS) on Thursday suspecting shady deal behind duty-free shop licenses.

The prosecutors confiscated computer hard drives and related documents from 10 locations including the headquarters of Lotte Group in Sogong-dong, SK Group’s highest decision-making body Supex Council in Seorin-dong, the office of the first vice finance minister Choi Sang-mok in Sejong city and the office of export and import logistics division of Korea Customs Service in Daejeon.

The nation’s third and fifth largest conglomerates SK and Lotte have handed out handsome donations of 11.1 billion won ($9.4 million) and 4.9 billion won respectively to Mi-R and K-Sports foundations established by Choi. Samsung Group was the first among conglomerates that are said to have made contributions worth 77.4 billion won to the two organizations created by Choi to receive visits by state prosecutors. It paid the most generous donation of 20.4 billion won and faces third-party bribery charge if found guilty of lobbying to pressure the National Pension Service to vote in favor of the group’s merger plan.

Lotte is said to have been pressured to cough out extra donation while the members of the founding family came under prosecution probe for embezzlement and other criminal charges. The prosecution suspects the two players who lost duty-free-shop licenses in the capital last year and pitching hard to win back business license could have used the donation to lobby to reopen their duty-free shops.

The government has been wobbly and suspicious on duty-free shop policy throughout the year. In March it eased the guidelines of duty-free license and following month announced a plan to allow four more in the capital. The opening was formerly announced in June. The restriction for dominant players was lifted and raised suspicion that the new bid was arranged to give a second chance to Lotte and SK.

SK Group Chairman Chey Tae-won and Lotte Group Chairman Shin Dong-bin had separate tete-a-tete with the president in February this year. The president who met seven conglomerate heads is suspected of having urged more donations.

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