Three officials at Lotte group firms told Reuters that some operations were severely hampered, with computers and documents needed to conduct business having been removed by investigators.
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South Korea is the world’s largest duty free shopping destination, although the market is increasingly crowded.
In a statement issued over the weekend, Lotte said it will cooperate with the investigation but will face a sizable challenge in meeting next month’s deadline to complete the IPO.
Its soon-to-be unlicensed store is 20,000 square metres and is Hotel Lotte’s second-largest by sales.
Besides the investigation, the Japanese-Korean conglomerate has been in turmoil since previous year, when a power struggle atop the Shin family erupted into public view.
In a surprise move past year, the Korea Customs Service stripped Lotte of a license to operate a lucrative duty-free store at the 123-story Lotte World Tower that it was completing in Seoul-the country’s tallest skyscraper.
In the most recent incident, Lotte said prosecutors have targeted the offices of Hotel Lotte and other subsidiaries, as well as Shin Young-ja, the 73-year-old older sister of Shin Dong-bin and a senior executive at the Lotte conglomerate. As public criticism grew of the Shin family, the government last November awarded a lucrative licence previously held by Lotte for a Seoul duty-free store to a rival bidder.
“Depending on events’ progress, the outcome may inform panel members on that point”, the official said. It also said it chooses the products it sells “fairly and objectively”.
All of Lotte’s eight listed units fell in Seoul on June 13, losing a combined 1.1tn won in market value.
Shin could not be reached for comment on Thursday.
A Lotte Group spokesman on Friday declined to comment on the reason for the raid, when asked whether it concerned a possible slush fund. Investors interpreted this as a lack of transparency and corporate governance at the Korean conglomerate.
Lotte Chemical slipped more than 1 percent while Lotte Confectionery and Lotte Chilsung Beverage Co Ltd, which were also raided, lost 3 percent and 4 percent respectively.
The channel said it has since clarified the number and considers the matter an opportunity for change.
“It’s quite an expensive asset, this (probe) coming along hasn’t changed our mind and we’re not particularly interested”.
The probe is “a confirmation of governance problems within Korea Inc”, said Park Yoo-kyung, a Hong Kong-based director at Netherlands-based APG Asset Management.
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The fate of Lotte World Tower also remains unclear as Noh Byeong-yong, who is in charge of building the Lotte Corp. skyscraper, was arrested over the weekend on charges of selling toxic humidifier disinfectants while he was serving as chief marketing officer of Lotte Mart years ago.
