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  • By Mar-Vic Cagurangan

Lotte's former executive facing trial for corporate espionage

Lotte Duty Free Guam airport

The Guam International Airport Authority expressed concern over the criminal indictment of a former Lotte Duty Free executive who is accused of corporate espionage.

Seung-Gyu Lee has been indicted on allegation by Korean authorities that he disclosed Lotte trade secrets to an executive of DFS Group, Andrew Ford, including a copy of the confidential proposal and presentation made to GIAA by Lotte in 2013.

Lee is facing a criminal trial next month in the Seoul Southern District Court.

“We are deeply concerned by these criminal charges against this former Lotte executive, which implicate DFS and certain of its high-ranking employees, and are looking into the circumstances surrounding the events described in the indictment,” the GIAA said in a statement.

Lotte’s concessionaire contract with GIAA — which is mired in continuing legal battles due to bribery allegations and other controversies surrounding the bidding process in 2012 —has been in place for the last five years.

Lotte took over the retail concession at the airport terminal from DFS in 2013.

GIAA said Lotte has paid more than $70 million in revenue to the airport in contrast to the $32 million paid by DFS during the last five years of its contract.

The current contract has also resulted in over $20 million in airport improvements, and was the linchpin in the $247 million bond issue that is funding the construction of the new arrivals corridor, GIAA said.

“It is disturbing to all of us at GIAA that our airport, which is so key to the health and continued growth of the Guam economy, would be caught in the middle of what appears to be a worldwide battle between two of the leading players in the travel retail industry. It is unfortunate that GIAA has been subjected to five years of litigation by former concessionaire, DFS, as a by-product of this fight,” GIAA said.

Despite the new blow, GIAA said it stands behind the 2012-2013 procurement “as a fair, open and competitive process that resulted in the best contract that the airport has ever had.”

DFS Guam brought the lawsuit in 2014 alleging that GIAA's procurement process that led to the award of the contract to Lotte for operation of the luxury goods storefront was tainted. Lotte counter-sued DFS Guam, which had formerly occupied the retail space for 30 years.The lawsuit is credit negative for the airport authority, according to Moody’s Investors Service.

“GIAA hopes that all of the questions surrounding the conduct of any of the bidders on the 2012-2013 procurement are resolved before the next solicitation so that the value of the concession is not adversely affected,” the statement reads. “As a public agency, GIAA is committed to a rigorous and fair procurement process for all our contracts."

GIAA said it fully supports the Korean prosecutors' investigation into the alleged corporate espionage.




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