Heads of SK and Lotte banned from leaving Korea

Heads of SK and Lotte banned from leaving Korea. March. 13, 2017 07:54. by Hyoun-Soo Kim, Jun Sung Chul kimhs@donga.com,dawn@donga.com.

Putting a prohibition of departure on Samsung Electronics Vice Chairman Lee Jae-yong (currently imprisoned) around the middle of December last year, the special prosecution team headed by Park Yeong-soo added SK Group Chairman Chey Tae-won and Lotte Group Chairman Shin Dong-bin on the list.

It is highly likely that the prohibition will be effective for the three under the on-going prosecution investigation for the time being. Prosecutors’ special investigation headquarters, which was handed over the investigation from the special prosecution team has selected Lotte and SK as preferred targets for investigation.

Having failed to make an aggressive response to protectionism from the U.S. and unreasonable act of revenge that China is taking on the ground of THAAD deployment, the two conglomerates are now anxious about managerial difficulties that they have faced with.

Since his last visit to Middle Eastern countries such as Qatar, Saudi Arabia and the United Arab Emirates, SK Group Chairman Chey Tae-won has been stranded in Korea for nearly four months now. He was absent from the World Economic Forum held in January, which he had regularly attended, and it’s unclear if he could take part in the Boao Forum For Asia Annual Conference in Boao, China at the end of this month. Although he needs to take direct actions for SK’s Chinese business, which has reached a stalemate after the Korean government has decided to deploy the THAAD, he cannot do so due to current condition.

At the center of China’s act of revenge, the Lotte Group chairman has also been stranded in Korea for four months. Lotte is expected to incur over 50 billion Korean won (approx. 43.5 million U.S. dollars) in sales loss as more than half of 99 Lotte Mart stores in the Chinese market have been ordered to suspend business. Lotte Group should make the most of its Chinese human network to minimize possible damage but its head is not allowed to go overseas. “Due to prosecution investigation from June to October last year and special prosecution from December last year up to now, Chairman Shin has now been banned from leaving the country for more than eight months," sources from Lotte said. "He’s not able to take actions for urgent business matters at the scene.”