Lotte Group’s financial affiliates ― Lotte Insurance, Lotte Card and Lotte Capital ― were found to have relied most on illegitimate support from the group to boost sales, compared with their financial rivals, sources said Sunday.
Amid mounting calls for economic democratization and fair competition in business, Lotte affiliates have been marching in the opposite direction to bring larger profits to chaebol, or local conglomerates, the financial policy team of Citizens’ Coalition for Economic Justice said.
Having observed the nation’s industrial injustice since 1989, the nonprofit civil organization of experts claimed that such affiliate-exclusive deals among conglomerates to would further concentrate economic power in chaebol and, hence, sap market competition.
For instance, Lotte Insurance Co. Ltd. had the highest dependency in retirement pension sales than any of its rival insurance firms. The Financial Supervisory Service posted a public disclosure on Jan. 30, stating that Lotte Insurance has made about 93.9 percent of its 716.3 billion won retirement pension sales from the Lotte affiliates.
Lotte Insurance’s largest shareholders include Lotte Group executive chairman Shin Kyuk-ho, his elder daughter and Lotte Foundation board of directors chairwoman Shin Young-ja, and Hotel Lotte.
Another Lotte affiliate, Lotte Card Co. Ltd., received disciplinary measures for its illegal marketing promotion.
On Jan. 31, the Financial Supervisory Service penalized Lotte Card for illegal sales promotion by offering excessive cash rebates and street soliciting to attract new members. The card firm received an 8.2 million won fine, the heaviest among the four disciplined card firms.
In a similar context, the state financial regulator punished Lotte Capital for forging approvals of 4,517 clients in agreement forms to review their personal information. Lotte Capital’s 133 loan consulting assistants used their personal mobile phones to confirm accessibility of their clients’ personal files.
Thanks in part to the shady sales boosters, Lotte Group expanded immensely, with its number of affiliate firms increasing from 46 in 2006 to 79 in 2011.
By Chung Joo-won (
joowonc@heraldcorp.com)
