SEOUL, June 23 (Korea Bizwire) – Lotte Group, South Korea’s fifth-largest family-controlled conglomerate, operates some four dozen overseas units in suspected tax havens, data showed Thursday, in a potential blow to the embattled group under investigation for alleged wrongdoing.
According to the data by corporate tracker Korea 20000 Corporate Research Institute, 46 of Lotte’s 256 overseas subsidiaries are based in suspected tax havens as of 2016.
Lotte has 26 subsidiaries, the largest amount, in Hong Kong, followed by Singapore with nine, the Netherlands with five and the Cayman Islands with three. There is one unit in Luxembourg, Mauritius and the British Virgin Islands each.
The total number of Lotte’s overseas units marks an increase of six from the previous year.
Lotte has 108 units in China and Hong Kong, or 42.2 percent of the total, where the conglomerate is seeking to bolster its retail and petrochemical operations.
Vietnam came next with 23, trailed by the United States with 17, Indonesia with 17, Malaysia with 16 and Kazakhstan with 11.
“Many South Korean large companies operate units in Hong Kong,” Oh Il-sun, head of the research institute. “Authorities have difficulty in analyzing data since South Korea has yet to sign a tax agreement with Hong Kong.”
Group flagship Lotte Shopping Co. controls 71 out of the total overseas units, according to the data.
Early this month, prosecutors opened an investigation into Lotte over its alleged embezzlement and slush fund creation and are now widening their probe to look into whether it used mergers and acquisitions and real estate deals to create secret funds.
Lotte has flatly denied any wrongdoing, claiming those deals were conducted in line with the group’s long-term business strategy. Lotte, whose business ranges from food and retail to chemical and construction, is mired in a prolonged sibling feud over its control.