Prosecutors also gestured at looking into the group’s overseas monetary transactions, focusing on the accusation that it has been paying out most of its profits to shareholding Japanese entities -- a phenomenon often described by the local media as “outflow of national wealth.”

According to the Fair Trade Commission, the group’s de facto holding company Lotte Hotel paid 121.3 billion won in 2011-2015 in dividends to its Japanese entity stakeholders, which account for 99.28 percent of total shares.

Soon, the focus stretched to whether the ultimate target of the probe was to dig into the possibilities of influence-peddling over the permission for construction by the President Lee Myung-bak administration of the group’s much-disputed landmark building in southern Seoul, although officials have denied the notion thus far.

“We are aware that people take a keen interest in the issue, but for various circumstances, Lotte World Tower is not subject to immediate prosecutorial probe,” said an official of the central prosecutor’s office Monday.

Despite such denial, however, observers point out that it may be likely for the incumbent Park Geun-hye administration to level gunpoint at the former Lee administration by using Lotte Group as the connecting factor.

The 123-story skyscraper in Jamsil has been at the heart of public dispute, partly for a number of fatal safety accidents during construction and also for the extent of the former administration allegedly having bent the rules to greenlight the construction of East Asia’s tallest building.

The construction project, said to be the lifelong ambition of group founder Shin, had been dismissed under the three administrations preceding Lee’s, mainly due to concerns on Air Force planes’ safety.

But as soon as Lee, formerly chief of Hyundai Engineering & Construction, took office in 2008, the long-thwarted plan suddenly picked up momentum, finally breaking ground in 2010.

In order to avoid risks of air clashes, the Air Force’s Seoul Air Base in Seongnam, located 5.5 kilometers south of the disputed high-rise, had to shift its runways slightly.

On Tuesday, investigators reportedly uncovered a money trail leading from Lotte Group to a retired Air Force lieutenant general who served as the deputy chief of staff, with suspicion of the conglomerate having handed 1.2 billion won to a construction firm headed by the retired general in 2008. 

The fact that Lotte Group marked exponential growth during Lee’s five-year term further boosted suspicions on under-the-table contacts. The conglomerate not only inked 26 cases of mergers and acquisitions during that time, but also stepped into the beverage market and won a monopolistic status in the duty-free shop sector. Its total assets more than doubled, from 40 trillion won in 2007 to 84 trillion in 2012.

Adding fuel to the political scenario is the prosecution’s previous practices of kicking off irregularity charges against former powers and their aides, especially when the incumbent president is in trouble.

The most conspicuous and tragic example was a corruption probe in 2009, Lee’s second year in office, on his predecessor President Roh Moo-hyun.
The issue was raised while Lee‘s approval ratings had crashed to a record low in the aftermath of the U.S. beef import dispute the previous year. The pressing investigation included the first-ever summoning of a former president for prosecutorial questioning. Roh committed suicide on May 23, 2009 in the midst of the escalating investigation.

Defensive of public criticism, some prosecutors claimed that such charges against faded powers should be seen as justice delayed, rather than a back-scratching alliance with the current power.

“It is highly difficult to obtain information on crimes involving incumbent powers,” Kim Hong-il, former chief prosecutor in Busan and currently senior lawyer at Shin & Kim, said in an academic forum held at Lotte Hotel Busan in April.

But once the administration changes, evidence of past crimes tends to make an appearance, which is when authorities gear up for investigation, he explained.

“Because of the time gap (between the irregularity and the consequent probe), the prosecution is often blamed for chasing after ‘dead powers’ like hyenas, but one should accept the reality to a certain extent.”

Observers thus predicted that Lotte’s alleged affiliation with the former Lee government will eventually rise to the surface.

“The (lobbying allegations concerning) Lotte World Tower is quite likely to rise as a probe agenda, sometime or another,” said Chung Sun-sup, CEO of Chaebol.com, a local research company on South Korea’s conglomerates.

“If so, the issue will deliver a considerable impact on the political circles.”
Some, especially those in opposition political parties, suggested that the prosecution’s full-fledged probe on Lotte may be a diversion from the recent set of scandals involving high-ranking former prosecutors.

Among them is former chief prosecutor Choi Yoo-jeong, who was arrested last month on charges of taking kickbacks and influencing the rulings of clients, including cosmetics firm CEO Jung Woon-ho. Hong Man-pyo, a former star prosecutor, was charged with intervening for the court verdicts of his clients in exchange for astronomical fees.

“The probe should be implemented thoroughly, but an attempt to turn public attention away from legal scandals may never be tolerated,” said The Minjoo Party of Korea in a written statement.

By Bae Hyun-jung  (tellme@heraldcorp.com)