South Korea prosecutors raid more Lotte Group firms

Reuters

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A flag bearing the logo of Lotte Hotel flutters at a Lotte Hotel in Seoul, South Korea, March 25, 2016. Photo: Reuters/Kim Hong-Ji/File Photo A flag bearing the logo of Lotte Hotel flutters at a Lotte Hotel in Seoul, South Korea, March 25, 2016. Photo: Reuters/Kim Hong-Ji/File Photo
South Korea's Lotte Group said prosecutors were conducting additional raids on at least ten units including Lotte Chemical, heaping further pressure on the sprawling beer-to-petrochemicals conglomerate.
Lotte Chemical, Lotte Confectionery Co Ltd and unlisted Lotte Engineering and Construction were among the firms raided, a spokesman for the country's fifth-largest conglomerate said.
A Lotte Chilsung Beverage Co Ltd spokesman also said the firm was being raided.
The new raids follow raids on Friday on the group's headquarters as well as several of its companies including unlisted Hotel Lotte, which has since had to pull an initial public offering worth up $4.5 billion.
In addition to the derailment of an IPO billed as the world's biggest this year, the aftermath of the raids has seen Lotte Chemical, the conglomerate's biggest listed unit, bow out of bidding for U.S.-based Axiall Corp while share prices of group firms have tumbled.
The Lotte Group spokesman declined to comment on the reason for the raids.
People familiar with the matter have said the Friday raids, which involved about 200 prosecutors and investigators, were part of an investigation into a possible slush fund.
The Seoul Central Prosecutors' Office could not be immediately reached for comment on Tuesday.
Shares in Lotte Group firms fell again on Tuesday, with Lotte Chemical having lost 6.1 percent and Lotte Confectionery down 9.3 percent since the first raids.
Hotel Lotte's IPO had been intended in part to simplify the ownership structure and improve corporate governance at the group after a bitter feud over succession among the founding Shin family last year drew wide public criticism.
Named after the heroine of an 18th century Goethe novel, Lotte has grown from its founding in Japan 68 years ago as a maker of chewing gum to a corporate giant with interests ranging from hotels and retail to food and chemicals.
The group has more than 90 firms and annual revenue of around $60 billion, according to the Korea Fair Trade Commission.
 

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