Troubling Management

Kim Chee-hyun, president of Lotte E&C.
Kim Chee-hyun, president of Lotte E&C.

 

Lotte Engineering and Construction (E&C) is having a big trouble winning offshore orders due to its stormy internal and external moods such as the prosecution's investigation into its incumbent CEO for raising slush funds.

According to the construction industry, this year, Lotte E&C's overseas orders added up to 208.8 billion won until the end of August. The figure is about 32% of overseas orders (640.1 billion won) landed by Lotte E&C last year. This year, Lotte E&C’s domestic orders amounted to 5.91 trillion won (97%) while overseas orders to only 3%. With recent global economic situations considered, it seems virtually impossible for the builder to achieve its target set earlier this year.

Early this year, Kim Chee-hyun, president of Lotte E&C, announced in his New Year message that this year's goal was to stably secure orders in Vietnam, Indonesia and China based on its experience in the construction of Lotte World Tower.

However, bad news continued in the second half of the year, disrupting its management activities. Since a full-scale investigation into the Lotte Group’s slush funds began, the prosecution searched Lotte E&C on allegations of participating in raising the slush funds. In September, president Kim was summoned to the prosecutor's office and grilled.

According to a recent prosecution investigation, Lotte E&C raised 30.2 billion in slush funds after inflating construction payments to 73 subcontractors from 2002 to 2013. Lee Chang-bae, a former president of Lotte E&C and Lotte E&C are currently under trial.

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