Hiring Lobbying Personnel
According to the Fair Trade Commission (FTC), a total of 1,215 reports on the violation of the Fair Trade Act were filed between 2009 and the end of September this year against the 30 major business groups subject to cross-shareholding restrictions. 15.8 percent of the reports were associated with the Lotte Group.
Last year, Lotte Department Store and Lotte Mart were caught by the FTC shifting sales promotion expenses to their subcontractors. The commission imposed fines of 4.6 billion won (US$4.4 million) and 300 million won (US$284,550) on them. Also, the National Tax Service recently launched a large-scale tax investigation on the group’s subsidiaries and imposed a surcharge of 60 billion won (US$56.9 million) combined. In May this year, executive and staff members of Lotte Home Shopping took billions of won in kickbacks in return for expediency for suppliers.
“We have banned any unfair trade activities by making our own efforts and implementing penalties against violators,” the group explained. However, some criticize that the Lotte Group is focusing more on collusion with influential people rather than the eradication of unfair trade practices by appointing former inspection agency figures as its outside directors.
It appointed 14 new directors at its shareholders meeting back in March, and nine out of them were such figures. In addition, 19 out of the 29 outside directors in the eight listed subsidiaries of the group are the National Tax Service, Financial Supervisory Service, Fair Trade Commission, the courts, prosecutors, and the Office of the President. The percentage is 65.5 percent, much higher than the 30 major conglomerates’ average at 36.9 percent.
“Our appointment of experts from outside as non-executive directors is in the interest of management transparency and trust with interested parties,” it added, continuing, “Each of the subsidiaries is in charge of the details of its appointment.”