Retail in Asia

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Korean Presidential crisis deepens as duty free retailers are raided

The extraordinary political crisis surrounding President Park Geun-hye escalated today, following raids by investigators on the offices of Lotte Group and SK Group – widely considered to be the front-runners for new Seoul downtown duty free licences due to be awarded next month.

The authorities are reportedly investigating whether the two businesses – in their efforts to win back licences lost in the 2015 round of bidding – funded two foundations controlled by the woman at the heart of the scandal, Choi Soon-sil, a close friend and unofficial aide of Park.

Prosecutors indicted Choi and a former presidential aide at the weekend on charges of colluding with President Park to pressure Korean businesses to make donations to the foundations. They also announced that the President will be investigated “as a suspect”, though the law gives her immunity from prosecution. Park is the first South Korean President to face a criminal investigation while in office.

No duty free retailer, or parent company, has been found guilty of any wrongdoing, The Moodie Davitt Report emphasises. Lotte Duty Free insists, for example, that it is an innocent party and hopes the licensing timetable will move ahead as planned (more reaction to come shortly).

It should also be pointed out that Lotte nor SK were hardly the recipients of any government favours in the last round of licence bidding, both losing their permits to widespread industry astonishment.

The scandal has shaken the country to the roots. Hundreds of thousands took to the streets in Seoul last Saturday, marking the fourth consecutive weekend of mass protests against Park.

The scandal has shaken the country to the roots. Hundreds of thousands took to the streets in Seoul last Saturday, marking the fourth consecutive weekend of mass protests against Park.

The scandal could have further repercussions for the travel retail sector than the current round of licence decisions, he said. Local media have repeatedly suggested links between last year’s hugely controversial duty free licence awards and Choi Soon-sil. Two of the industry newcomers, Doosan Group (Doota Duty Free) and Hanwha Galleria (Galleria 63 Duty Free) have come under the microscope as the fall-out intensifies.