Watchdog accuses Korean customs of intentionally dropping Hotel Lotte in duty-free licensing

2017.07.11 16:36:23 | 2017.07.11 16:37:02
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South Korea’s Board of Audit and Inspection on Tuesday accused the country’s customs authority of fabricating material and discriminating Hotel Lotte Co. in assessment under new duty-free business guidelines in 2015 that ended up closing down the company’s 30-year-old duty-free shop in southern Seoul.

According to an inspection conducted by the state audit agency on suspected illicit selection of duty-free operators upon request by the National Assembly, the Korea Customs Service was allegedly involved in 13 unfair practices when giving out licenses in July and December of 2015.

The BAI said that the customs service illicitly assessed grades when reviewing to select three new duty-free store operators in Seoul in July 2015 by giving Hotel Lotte Co. unfair grades in three criteria, which in the end lowered its total grade by 190 points. Hanwha Galleria Timeworld Co., the duty-free operating unit of Hanwha Group, meanwhile, was given 240 points higher than what it should have received, allowing it to be selected over Hotel Lotte.

The BAI also suspected that in November 2015, the customs agency unfairly assessed grades of two criteria while reviewing Lotte World Tower store for operations, which as a result, Lotte received 191 lower points that when it should have received while Doosan 48 points. This has led Doosan to be selected as a duty-free store operator over its rival Lotte.

The customs agency is suspected of having created an unfair environment for Hotel Lotte by pressuring the chair examiner to read out a document from the fair trade commission in front of other examiners that when grading bidders, they should take into account the overall oligopolistic structure of duty free stores in the city that should be resolved. Hotel Lotte is a leading duty-free store operator.

The Korea Customs Service is also suspected of having stored documents related to duty free store selection in 2015 and returning them to original holders while destroying documents of those duty-free stores that failed to receive licenses upon request by the National Assembly to submit documents during parliamentary inspection in 2016.

Based on its findings, the BAI asked the commissioner of the customs office to take disciplinary action against 10 officials suspected of being involved in returning and destroying documents and of falsely manipulating criteria measurement and misgiving evaluation grades.

In particular, the state audit agency requested a prosecution probe on four officials suspected of obstructing justice by writing up false official documents and being involved in a deceptive scheme by misleading evaluation grades when selecting duty free stores in July 2015.

The BAI asked the commissioner of the customs service to cancel license of any duty-free store operator according to customs law if the probe result shows them of having been selected by unfair means.

By Ahn Byung-joon

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]

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