April 20, 2024

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[THE INVESTOR] Lotte Group Chairman Shin Dong-bin was on Dec.22 sentenced by a Seoul court to 20 months in prison with a two-year suspension for embezzlement and breach of trust.

The Seoul Central District Court also passed down a four-year jail term to Shin‘s father and founder of Korea’s fifth-largest business group, Shin Kyuk-ho, with a fine of 3.5 billion won (US$3.24 million). But he avoided an arrest as the court took his advanced age -- he is 95 years old -- into account. 

Critics are calling the rulings "a slap on the wrist," as the burden has been placed on a senile founder -- who won‘t be able to serve out any of the sentences anyway.

The court did sentence Shin Young-ja, the chairman’s elder sister and head of the Lotte Foundation, to two years in prison, but this has been largely expected.

Seo Mi-kyung, the founder‘s mistress, received a suspended sentence, while Shin Dong-joo, the chairman’s elder brother and former vice president of Tokyo-based Lotte Holdings, was found not guilty of any management irregularities.

Prosecutors had demanded 10 years for both the chairman and his father. They demanded five years for Shin Dong-joo, and seven years each for Shin Young-ja and Seo.

The Shin family were indicted last year on a string of charges including embezzlement and breach of trust.

They were accused of paying 50 billion won of wages to family members who had never worked for the company, in addition to inflicting 130 billion won in losses on Lotte units by forcing them to cover the losses of other subsidiaries.

The court found the chairman guilty of letting Seo run concessions at Lotte Cinema movie theaters and her daughter receive salaries from Lotte with no work commitment. But it did not aggravate the charge as the prosecution has requested, on grounds that it‘s difficult to determine the exact amount of losses inflicted upon the firm.

The court dismissed the charge that Shin’s call to have Lotte affiliates buy shares of its IT transaction unit incurred 47.1 billion won in losses for the units, ruling that it was a justifiable managerial decision.

The court also did not accept the prosecution‘s claim that the founder Shin evaded some 70 billion won in gift taxes, citing insufficient evidence.

By Alex Lee and news wires (alexlee@heraldcorp.com)