Lotte subsidiary refuses to lay low in midst of scandal

October 26, 2016 | 12:02

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In spite of the scandal over its muddled operations, Lotte Asset Development Co., Ltd, a subsidiary of South Korean conglomerate Lotte Group – one of the future developer of the $2.2 billion Thu Thiem Eco Smart City project in Ho Chi Minh City’s Thu Thiem New Urban Area, is expanding in the Vietnamese real estate market by acquiring minority stakes in businesses operating in the country, according to newswire Koreaherald.

Lotte Asset Development has decided to acquire 10 per cent of Lotte Properties (Hanoi) Singapore for $14.43 million. Lotte Properties (Hanoi) Singapore currently manages numerous projects in Hanoi.

“Lotte affiliates as well as local partners will acquire the remaining 90 per cent,” said Im Hyeong-uk, head of asset development on the company’s sales and communications team.

Along with the move to boost its presence in Hanoi, Lotte Asset Development also announced purchasing a 10 per cent stake in a yet-to-be-named company operating in real estate in Ho Chi Minh City. The deal value is reported to be about $19.67 million.

The yet-to-be-named company will act as the main developer of the $2.2 billion Thu Thiem Eco Smart City project in Ho Chi Minh City’s Thu Thiem New Urban Area.

The purchase announcements come in the wake of suspicions that Lotte Asset Development acquired tax haven Luxembourg-based Coralis SA to buy land and the investment certificate for the Lotte Centre Hanoi complex.

Coralis SA had been used for offshore tax evasion by Kim Seon-yong, the third son of former Daewoo Group chairman Kim Woo-jung, before being acquired by Lotte Asset Development in 2009 for $60.24 million.

In 2015, Coralis SA reported a net loss of $47.31 million, raising a suspicion that Lotte’s owners were exaggerating its losses to hide money.

Earlier in April this year, Lotte Asset Development, in collaboration with Lotte Shopping Co., Ltd., Hotel Lotte Co., Ltd., and Lotte Engineering & Construction Co., Ltd., as well as three Japanese enterprises officially announced the plan to develop the $2.2 billion Thu Thiem Eco Smart City project.

Covering an area of 16.71 hectares, the complex features an international trading-financial-banking centre, hotels, serviced apartments, offices, and multifunctional condos with a highlight being a 50-storey building.