Lotte chief and ex-president's friend jailed in South Korea scandal

[February 13, 2018]   By Joyce Lee

SEOUL (Reuters) - The friend of former South Korean leader Park Geun-hye who was at the center of an influence-peddling scandal that rocked the country's business and political elite has been sentenced to 20 years in jail, a Seoul court said on Tuesday.

The court also sentenced the chairman of the Lotte Group, the country's fifth-largest conglomerate, to two years and six months in prison in the same case.

Choi Soon-sil, a confidante of Park, was convicted of receiving bribes from South Korean conglomerates including Samsung, the world's biggest maker of smartphones and semiconductors, and the Lotte Group.

Park was dismissed from the presidency last March after being impeached and standing trial separately on charges of bribery, abuse of power and coercion. She denies any wrongdoing.

Lotte's chairman, Shin Dong-bin, was in court at the time of the verdict and was taken into custody.

"His act crushed the hopes and faith of the community and the people... Giving bribes hurts the fairness of society," said Kim Se-yun, the presiding judge.

Shin's arrest creates a leadership vacuum at Lotte, a retail-to-chemicals giant with 110.8 trillion won ($102 billion) worth of assets, as it navigates mounting losses at its China operations.

The verdict comes at a time when Lotte, a sponsor of the Winter Olympics currently on in South Korea, had stepped up marketing in a bid to promote its brand and boost sales. Shin, who is also president of the Korea Ski Association, was staying in Pyeongchang, the venue of the Games, before coming to Seoul for the court verdict.

After the court ruling, Lotte said the chairman's jail sentence was "unexpected", noting that it could affect the retail giant's current plans such as an initial public offering of key unit Hotel Lotte.

"The situation was unexpected and we are in despair. We respect the court's decision, but the result is very regrettable." Lotte said in a statement.

Last year, Lotte was shunned in China after providing land to South Korea's government so that a U.S. anti-missile system could be installed in the country.

The conglomerate has also suffered because of infighting in 2015 between Shin and his brother.

Choi Soon-sil, a confidante of former South Korean president Park Geun-hye, is seen at court in Seoul, South Korea February 13, 2018. Yonhap via REUTERS

SAMSUNG SCION FREED EARLIER

Prosecutors had sought a four-year jail term for Shin, accusing Lotte of giving a foundation backed by Park and Choi 7 billion won ($6.46 million) for favours such as a duty free store license.

Shin and Lotte had denied the charge.

The jail term for Shin follows a December ruling in which the court found him guilty of breach of trust and embezzlement in a different case but suspended sentencing, leaving him free to run the group.

Kim, the judge, said Park "abandoned constitutionally-given responsibility and gave position and power to others" and that Choi used her position "to monopolize state business and seek personal gain".

Prosecutors had demanded a 25-year jail term for Choi on charges including coercion, bribery, influence-peddling and abuse of authority.

Choi's lawyer Lee Kyung-jae said he was concerned that his client's "severely heavy sentence" came from "the judges forming their impressions straight from the prosecution's arguments," adding that he would appeal against the verdict.

Tuesday's verdict follows an appeals court ruling last week that freed the scion of the family that controls Samsung, Jay Y. Lee, after a year in detention.

Lee had been charged with giving some of the bribes that Choi was accused of receiving. However, last week's ruling said Lee's bribe-giving was a "passive compliance to political power," appearing to put the weight of the blame on Park and Choi.

Park, who is in jail, is currently being defended by state attorneys after her defense team resigned en masse last October in protest at the extension of her detention period until April this year.

A verdict in her trial is expected before her detention period ends in April.

(Reporting by Joyce Lee, additional reporting by Ju-min Park and Jane Chung; Editing by Raju Gopalakrishnan)

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