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The Korea Herald
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THE INVESTOR
March 29, 2024

Retail & Consumer

[PRESIDENTIAL SCANDAL] Duty-free bidders brace for Choi scandal impact

  • PUBLISHED :November 04, 2016 - 16:50
  • UPDATED :November 07, 2016 - 10:59
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[THE INVESTOR] Bidders for new duty-free business licenses are concerned about the negative impact from the Choi Soon-sil scandal, as it appears to have begun spilling over to the business community.

According to reports quoting business insiders, Lotte Group and SK Group, in particular, have expressed fears their alleged involvement in the scandal may frustrate their efforts to win back operational licenses of lucrative duty-free businesses next month.

SK and Lotte are among a list of conglomerates that allegedly were forced to make donations for the establishment of the Mir and K-Sports foundations closely linked to Choi, a longtime friend of President Park Geun-hye.

Korea Customs Service, in charge of examining qualifications for duty-free businesses, is scheduled to grant the license for new duty-free stores to three conglomerates and one midsize retailer in Seoul next month. Lotte Duty Free, Shinsegae DF, HDC Shilla Duty Free, SK Networks and Hyundai Department Store are vying for the license.

Since Lotte failed last November to renew its expired license for a duty-free outlet in the 123-floor Lotte World Tower building in Jamsil due to critical public opinion about the family feud between Chairman Shin Dong-bin and his elder brother, it has been all the more desperate to get the license this year. 


A panoramic shot shows the night view of Lotte World Tower in southeastern Seoul, where Lotte hopes to operate a duty-free store. Lotte Corp.



However, Lotte reportedly financed 4.5 billion won ($3.94 million) for the foundations through its duty-free and chemical subsidiaries, worsening its corporate reputation among consumers.

“It is hard to comment on how the issue will affect the result,” said a spokesman at Lotte Duty Free. “We hope the deliberation process to be fair, because the deliberation has been affected by external conditions in the past.”

Meanwhile, SK funded 6.8 billion won through SK hynix, according to media reports. Both Lotte and SK are being investigated by prosecutors.

For SK, the duty-free license is necessary in order to build a spa resort targeting foreign tourists. SK Networks has a plan to invest 120 billion won to construct a resort complex of about 40,000 square meters with the world’s longest pool and spa in two years.

“We hope the license deliberation is conducted in a transparent manner to select a qualified operator,” said a spokesman at the company.

HDC Shilla Duty Free also can’t be free from the issue since its parent Samsung Group was found to have donated a total of 20.4 billion won for the two foundations. Shinsegae is also said to have offered 500 million won.

Hyundai Department Store is the only bidder that hasn’t been involved in the scandal so far.

Since there have been complaints the government’s deliberation for the license seems to be political, there are even suspicions the presidential confidante might have influenced previous bidding results.

“For example, we can imagine that the bidders that made more donations for the foundations were selected last year,” an industry source told The Korea Herald.

By Song Su-hyun/ The Korea Herald (song@heraldcorp.com)

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