Banks

RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

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Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

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Financial

Sales in Rocket Internet’s portfolio companies rise 30%

Revenues at Rocket Internet rose strongly at its portfolio companies in the first nine months of the year as the German tech group said it was making strides on the “path towards profitability”. Sales at its main companies increased 30.6 per cent to €1.58bn while losses narrowed. Rocket said the adjusted margin for earnings before […]

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Currencies

Renminbi strengthens further despite gains by dollar

The renminbi on track for a fourth day of firming against the dollar on Wednesday after China’s central bank once again pushed the currency’s trading band (marginally) stronger. The onshore exchange rate (CNY) for the reniminbi was 0.28 per cent stronger at Rmb6.8855 in afternoon trade, bringing it 0.53 per cent firmer since it last […]

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Currencies

Nomura rounds up markets’ biggest misses in 2016

Forecasting markets a year in advance is never easy, but with “year-ahead investment themes” season well underway, Nomura has provided a handy reminder of quite how difficult it is, with an overview of markets’ biggest hits and misses (OK, mostly misses) from the start of 2016. The biggest miss among analysts, according to Nomura’s Sam […]

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Categorized | Financial

S Korea seeks warrant for Lotte chairman


Posted on September 26, 2016

epa05548553 Shin Dong-Bin (C), CEO of Lotte Group, receives questions from journalists as he appears before the Seoul Central District Prosecutors' Office to undergo questioning over suspected embezzlement in Seoul, South Korea, 20 September 2016. EPA/JEON HEON-KYUN©EPA

South Korean prosecutors said they were seeking an arrest warrant for Shin Dong-bin, Lotte Group chairman, over allegations of embezzlement and breach of trust concerning Won170bn ($153m) amid a corruption probe into the group.

The country’s fifth-largest conglomerate has been plagued by several corruption scandals this year, following an acrimonious succession feud among members of the founding family.

    Mr Shin, who was questioned by prosecutors last week over the scandals, has denied most of the allegations, according to Seoul’s state-run Yonhap News. A court hearing on whether to issue an arrest warrant for Mr Shin, 61, will be held this week. 

    Authorities allege that Mr Shin orchestrated unfair intragroup business deals and created a slush fund at the group’s construction unit. His siblings have also been questioned by prosecutors over allegations they received huge salaries from Lotte group companies without working there, while Mr Shin’s father was investigated for allegedly dodging inheritance taxes.

    Mr Shin’s family members under investigation were unavailable for comment. Lotte, on behalf of Mr Shin, said he would co-operate with the probe.

    The investigation, which began in June, is taking a toll on the group’s business deals. The retail-to-chemicals company scrapped a $4.5bn initial public offering of its hotel unit and abandoned a $3.1bn bid for US chemicals producer Axiall.

    Last month, Lee In-won, vice-chairman and Mr Shin’s top lieutenant, committed suicide a day before he was due to appear before prosecutors for questioning over the scandals.

    Hotel Lotte lost a duty-free licence last year for one of its main shops as Mr Shin was embroiled in a family succession battle. The boardroom tussle and the latest corruption scandals have sparked a public backlash against Lotte as it has highlighted poor governance at the country’s family-run conglomerates known as chaebol. 

    “I don’t think such problems are just limited to Lotte. I suspect most chaebol groups are involved in similar business practices such as shady intragroup deals,” said Chung Sun-sup, head of corporate analysis group Chabul.com. “It is still common for chaebol controlling family members to misuse company funds through unjustified salaries and irregular bookkeeping.”

    Shares of Lotte Group companies fell on Monday, with Lotte Shopping down 1.9 per cent and Lotte Chemical off 0.5 per cent, while the broader market was down 0.25 per cent. 

    Mr Chung noted that South Korean judges have favoured suspended sentences for business figures convicted of white-collar crimes, followed by presidential pardons in the name of their contributions to the economy. Such a tendency has added to investors’ concerns over the lack of accountability of the families that control chaebol.