Lotte chief gets suspended prison sentence leaving him free to run firm (updated)

Lotte

22/12/2017 07:54

* Embattled Lotte avoids leadership vacuum 
    * Prosecutors expected to appeal -experts 
    * Lotte's dept stores freeze wages partly on China woes 
-officials 
 
 (Adds ruling, Shin and Lotte comments) 
    By Joyce Lee 
    SEOUL, Dec 22 (Reuters) - A Seoul court on Friday found 
Lotte Group Chairman Shin Dong-bin guilty of breach of trust and 
sentenced him to 20 months in prison, suspended for two years, 
leaving him free to try and revive the conglomerate after steep 
losses in China. 
    The Seoul Central District Court cleared the executive of 
some counts of breach of trust and also of embezzlement. 
    "I apologise to the public," Shin said as he left court, 
without commenting further.  
    The ruling will come as a relief to the retail-to-chemicals 
group at the end of a difficult year during which it became the 
highest-profile corporate victim of a Beijing-Seoul spat over 
South Korea's installation of a U.S. missile defence system. 
 urn:newsml:reuters.com:*:nL4N1MR6B7  urn:newsml:reuters.com:*:nL4N1LN20L  
    South Korea's fifth-largest conglomerate said, "We respect 
the court's decision. Lotte Group executives and employees will 
further unite to contribute to economic progress and do our best 
to meet our social responsibility."  
    The prosecution did not have an immediate comment. Legal 
experts said the prosecution was likely to appeal. 
    Shin is the subject of another ongoing trial related to a 
bribery scandal involving former President Park Geun-hye. 
Prosecutors are seeking a four-year jail term and a fine of 7 
billion won ($6.49 million).  urn:newsml:reuters.com:*:nL3N1OE014 
    In the meantime, Friday's ruling means Lotte, with 110.8 
trillion won worth of assets, avoids a leadership vacuum for the 
time being as it navigates mounting China losses and an 
uncertain recovery. 
    Shunned in China, its key market, after it was pressed by 
Seoul to provide land for the THAAD missile defence system, 
Lotte's third-quarter China hypermarket sales were nearly wiped 
out to about $278,000 from around $264 million a year earlier.  
    Nearly all Lotte Mart stores in China have been shut for 
much of the year with local authorities citing fire safety 
issues, and the group has now put the business up for sale. 
 urn:newsml:reuters.com:*:nL4N1MN1AO  
    But the sale is likely to be delayed past the end-2017 
deadline Lotte had sought, Lotte Corp  004990.KS  official Choi 
Min-ho said, without giving a reason. 
     
    BATTENING DOWN THE HATCHES 
    Lotte's businesses in South Korea, including its major 
duty-free operations, that had counted on big-spending Chinese 
tourists, remain under pressure amid curbs on Chinese tour 
groups travelling to the country.  urn:newsml:reuters.com:*:nL3N1NY20K 
    South Korea's credit rating agencies have downgraded or cut 
their outlook for corporate bonds of the group's flagship 
retailer Lotte Shopping  023530.KS  and Hotel Lotte  HTLOT.UL , 
citing hurdles in improving their financial stability. 
    Lotte, which shelved plans for an estimated $4.5 billion IPO 
of Hotel Lotte amid the investigation, is now battening down the 
hatches as a difficult year draws to an end. 
    Lotte Shopping has frozen wages for its department store 
business this year for the first time since 2009, three Lotte 
officials said this week, declining to be identified as the 
matter was sensitive.  
    While Lotte confirmed wages had been frozen, the 
retail-to-chemical conglomerate declined further comment.  
    However, one of the officials from the department store 
business said: "Wages have been frozen due to various factors, 
but the THAAD issue was one of them." 
 
($1 = 1,078.4600 won) 
 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ 
With China dream shattered over missile land deal, Lotte faces 
costly overhaul     urn:newsml:reuters.com:*:nL4N1MR6B7 
Ghost stores, lost billions as Korea Inc's China woes grow    
 urn:newsml:reuters.com:*:nL4N1LN20L 
S.Korea prosecutors seek four-year jail term for Lotte group 
chief     urn:newsml:reuters.com:*:nL3N1OE014 
Lotte says has several suitors for China supermarkets, seeks 
sale by year-end     urn:newsml:reuters.com:*:nL4N1MN1AO 
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> 
 (Reporting by Joyce Lee; Additional reporting by Heekyong Yang, 
Dahee Kim and Haejin Choi; Editing by Adam Jourdan and Himani 
Sarkar) 
 ((jungyoon.lee@thomsonreuters.com; +82 2 3704 5609; Reuters 
Messaging: jungyoon.lee.thomsonreuters.com@reuters.net)) 
 
Keywords: LOTTECORP CHIEF/