Landmark Building in Hanoi Allegedly Involved in Lotte’s Slush Fund

Tuan Minh

14:45 22/06/2016

BizLIVE - Korean-Japanese conglomerate Lotte Group is suspected of using a shell company in Vietnam to evade taxes and hide assets.

Landmark Building in Hanoi Allegedly Involved in Lotte’s Slush Fund

A view of Lotter Center in Hanoi. (Photo:

South Korean authorities have suspected the owner family of South Korean conglomerate Lotte Group of using an offshore company that developed a high-rise in Hanoi to funnel money into a slush fund, according to The Korea Herald.
The allegation came amid probe by Korean prosecutors into Lotte Group for suspected corruption, illegal intragroup deals and embezzlement.
According to the prosecution, Lotte acquired Luxembourg-based Coralis SA, the paper company in question, for $60.24 million in 2009 from a family member of former Daewoo Group Chairman Kim Woo-jung in order to buy the land and development license for Lotte Center Hanoi, a shopping and leisure complex.
The 65-storey building was built by Lotte Engineering & Construction at a cost of $400 million and was opened in September 2014.
Lotte Shopping and Hotel Lotte each then bought a 45% stake in Coralis from Lotte Asset Development.
However, Coralis SA reported a $47.3 million loss in 2015, raising questions about whether Lotte’s owners were seeking to hide money by exaggerating its losses.
In addition, Lotte E&C is also suspected of having overcharged construction fees to Lotte Shopping and Hotel Lotte to hide funds, according to Korean media.
A spokesman of Lotte Group denied the allegations, saying that buying companies that have local business licenses is a common practice when pursuing projects overseas.
Lotte’s companies regularly utilized companies set up in tax havens overseas such as the Cayman Islands when pursuing overseas mergers and acquisitions. Korean authorities have identified five or six paper companies involved in Lotte’s transactions, according to the Korea Herald.
Lotte has invested over $20 billion in 20 subsidiaries in Vietnam which operate in a wide range of businesses including retail, real estate, and cinema. It plans to kick off the construction of a $2-billion smart city complex in Ho Chi Minh City.