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| Shin Kyuk-ho Lotte Group founder | Shin Dong-joo Eldest son | Shin Dong-bin Second son |
By Lee Hyo-sik
Lotte Holdings, a holding company of Lotte Group in Japan, has dismissed group founder and General Chairman Shin Kyuk-ho, sending shockwaves through business circles both in Japan and Korea.
Lotte Holdings held a board of directors' meeting Tuesday and decided to strip Shin of his board seat and chairmanship, according to Lotte Group.
His second son Dong-bin will be in charge of Lotte's operations in Japan, the group said. On July 15, Dong-bin, 60, was named as CEO of Lotte Holdings.
The senior Shin was named honorary chairman of Lotte Holdings and will remain as general chairman of Lotte Group in Korea, the group said.
The unexpected move came after a failed attempt by Dong-bin's elder brother, Dong-joo, who had tried to oust his younger brother and other board members from Lotte Holdings.
According to the group, Dong-joo, who was fired as vice chairman of Lotte Holdings by his father in January, flew to Japan, Monday, accompanying the senior Shin and several other family members.
Dong-joo unexpectedly came to the company headquarters the same day and ordered company executives to dismiss six group board members, including his younger brother.
Following the incident, Dong-bin and other board members held a meeting early Tuesday and called Dong-joo's move illegitimate.
They then decided to dismiss the group founder who allegedly supported Dong-joo's bid to take back control of Lotte Holdings.
The senior Shin has been moving in a wheelchair and having trouble speaking.
"The founder has stepped down from his post at Lotte Holdings so that Dong-bin can take full control of the group's operation in Japan," a Lotte Group official said. "He will continue to maintain his chairmanship in Korea though."
The founder holds a 28 percent stake in Lotte Holdings in Japan, which has a 19.1 percent stake in Lotte Hotel, the de facto holding company of the Lotte Group here. Lotte Hotel holds an 8.8 percent share in Lotte Shopping and considerable stakes in other key group units.
The unexpected turn of events came two weeks after Dong-bin appeared to have consolidated his position as the crown prince of retail giant Lotte Group. With the group's Korean business under his belt, the 60-year-old was appointed as CEO of Lotte Holdings.
It appeared to have reaffirmed his victory in the two-way race with his elder brother for the throne of the 92 trillion won ($90 billion) empire.
The elder brother was ousted from his seats at Lotte Holdings and other Japanese units in January by his father after he attempted to meddle in the management of the group's Korean operations.
Even though Dong-joo lost his official titles, he still holds considerable stakes in Lotte Confectionary and other key units of the group here.
The former vice chairman holds a 3.96 percent stake in the snack maker, while Dong-bin has 5.34 percent. Dong-joo also holds a 13.45 percent in Lotte Shopping and considerable stakes in Lotte Chilsung and other group units, meaning that a sibling feud over control of the retail empire could happen again.
The senior Shin founded Lotte in Japan in 1948 as a snack maker. Over the years, the group expanded into the manufacturing and services sectors. The group entered Korea in 1967 and has grown into the country's fifth-largest conglomerate, operating units in the retail, hotel and petrochemical industries, among others.
The group as a whole posted sales of about 90 trillion won in 2014, and aims to boost that to 200 trillion won by 2018.
Lotte Korea reported 83 trillion won in sales for 2013, with its Japanese sister achieving less than 6 trillion won.
In contrast to Lotte Group's rapid growth in Korea, its Japanese operations have largely stagnated. The group's Korean business is 15 times larger by revenue than the Japanese unit.
