S.Korea prosecutors seek 10 years' jail for Lotte founder

Seoul (AFP) –


South Korean prosecutors on Wednesday demanded a 10-year jail term for the aged founder of embattled retail giant Lotte Group for breach of duty and tax evasion.

Shin Kyuk-Ho founded the group in Tokyo in 1949, before building it into a sprawling giant that today has dozens of units focused on food, retail and hotel businesses in South Korea and Japan.

But the 94-year-old was charged with paying millions of dollars in "wages" to relatives who made little contribution to the management, or awarding lucrative deals to his mistress.

Shin eventually caused the group losses of 77.8 billion won ($69.7 million), prosecutors said, adding he also secretly gave fortunes to relatives without paying taxes.

Prosecutors also demanded he be fined 300 billion won.

"He needs to be held accountable harshly even considering his health and age, given the nature of the crime and the scale of financial losses he caused," prosecutors said in a statement.

The frail-looking nonagenarian arrived in a Seoul court in a wheelchair and appeared to have difficulty understanding questions from the judges on Wednesday.

They do not have to follow the prosecutors' recommendations when they give their verdict, expected next month.

Shin's mistress and other relatives, including the current Lotte Group chairman Shin Dong-Bin, are also in the dock on similar charges.

Prosecutors earlier demanded a 10-year jail term for Dong-Bin and prison terms ranging from three to five years for others.

The Shins have been accused of running Lotte like a personal fiefdom with little scrutiny by investors and regulators -- a common criticism of the family-run conglomerates known as chaebol that dominate the South's economy.

The group has been a target of state probes since the founder's two sons made headlines with a fight for control of the group, featuring public mudslinging and personal attacks on each other.

Lotte also suffered a crippling blow to its business this year after swapping a golf course it owned with the Seoul government for the deployment of a powerful US missile defence system hated by Beijing.

The deployment of the Terminal High Altitude Area Defense (THAAD) system was aimed at guarding against threats from North Korea but China sees it as a threat to its own security.

Beijing has slapped a series of measures seen as economic retaliation on South Korean firms, particularly Lotte.

With losses snowballing, Lotte last month announced a plan to sell its supermarket unit in China.