South Korean prosecutors have arrested and charged Shin Dong-bin, chairman of Lotte. The conglomerate is one of the ten biggest companies in the country, and is its second largest entertainment player.
The charges of bribery relate to $6.16 million of alleged payments made to Choi Soon-sil, the mysterious friend of deposed Korean president Park Geun-hye. Choi is alleged to have used her close connections to Park for financial gain. Prosecutors say that large companies used Choi to get official approval for favors, including the approval of certain deals. Park was also charged with receiving bribery payments. All have denied the charges.
The arrest of Shin is expected to create a temporary vacuum within the group’s senior management. But as he has not been kept in detention that vacuum may not be extreme.
Lotte operates restaurant chains, hotels and department stores. Its cinema chain is the second largest in Korea, and it has further cinemas in China, Vietnam and Hong Kong. Within Korea, its film distribution arm is the local sub-distributor for Paramount.
Lotte is also currently facing enormous pressure over its operations in China, following the company’s agreement to provide land on which the Korean government plans to site the THAAD missile defense system. China objects to THAAD and since the deployment decision, last July, has sought to cut ties with the Korean entertainment industry. Lotte’s decision has stirred up sections of the Chinese public, who have boycotted its supermarkets in China and have cut their spending at Lotte’s duty free operations. Lotte has also had to halt construction of a theme park that it was building in China.
The arrest of Shin follows that of Lee Jae-yong, the acting head of electronics giant Samsung who was arrested on Park- and Choi-related bribery charges last month. Lee denies the charges.
Park and the country’s former culture minister are also alleged to have created a blacklist of Korean culture industry figures who were to be denied public funding as punishment for not supporting Park’s government.