By Lee Hyo-sik
The escalating Lotte succession war is beginning to bite into its businesses as the crippled fifth-largest conglomerate is increasingly unable to make timely decisions with its top managers obsessed with securing managerial control.
Growing anti-Lotte sentiment has also made it difficult for group units to carry on with business because more and more consumers and business partners choose to keep their distance.
The worsening public opinion of Lotte and other chaebol families is feared to spoil the mood for granting special pardons to jailed business tycoons and dampen the government drive to lessen regulations on the activities of large companies.
According to chaebol insiders, Wednesday, several of Lotte Group's key projects pushed by Chairman Shin Dong-bin may hit a snag as he has to focus all his attention on defending his managerial control from his father and group founder Shin Kyuk-ho and his older brother Dong-joo.
Among others, the group's plan of taking Lotte Data Communication public this year has run into trouble because it is impossible for Dong-bin and other company shareholders to reach a consensus on how to list the group's IT unit on the local bourse. The group has been pushing to list the company since 2013.
Dong-bin holds a 7.5 percent stake in the unit, while Dong-joo and Young-ja, the eldest daughter of the Lotte founder, have 4 percent and 3.5 percent, respectively.
It is almost impossible for Lotte Data Communication to be listed on the stock market when its major stakeholders are engaged in a management dispute, said an executive at one of the country's major business associations. "The ongoing family feud at Lotte Group is feared to have adverse effects on the group's businesses."
The management row has also put Lotte Group in a difficult position when it desperately needs to renew licenses for operating two duty free shops in Seoul. Currently, the group runs the country's largest duty free store near its main department store in downtown Seoul, and another at the Lotte World Tower in southern Seoul.
It has to renew the licenses every five years from the Korea Customs Service, but Lotte may face difficulty in doing so in light of the worsening public opinion.
"The family infighting will not help Lotte renew its duty free licenses," the executive said. "Founding family members really need to sit down and resolve the problem before the situation gets any worse."
In particular, the group has aggressively been expanding its retail business across Asia, he said, adding that its overseas ventures could lose momentum unless the founding family members put their house in order.
Lotte has also been seeking to build a comprehensive resort complex, including a foreigner-only casino, in the nation's second-largest port city of Busan. To do so, it needs to obtain a wide range of approvals from the central and municipal governments. But the group may have a harder time pushing ahead with the project.
Lotte dispute could spoil pardons for jailed tycoons
The executive said the family mudslinging at Lotte Group could make President Park Geun-hye reluctant to offer special pardons to heads of large business groups who are currently behind bars amid the increasingly unfavorable public sentiment toward chaebol.
In July, President Park made remarks hinting that special pardons will be granted to business tycoons on the 70th anniversary of Korea's independence from Japan's colonial occupation (1910-1945) on Aug. 15.
Since then, Park Yong-maan, chairman of the Korea Chamber of Commerce and Industry (KCCI), and business leaders have demanded that jailed businessmen be pardoned and given another chance.
"Lotte's management infighting may dampen the mood for pardoning jailed businessmen," he said. "This could also weaken the government deregulation initiatives as more people call for rules to force conglomerates to improve their governance structure and management style. So it is everyone's best interests for Lotte to settle the situation as quickly as possible."
SK Group, in particular, has been working hard over the past few years to have its chairman, Chey Tae-won, released from prison.
Chey has been in prison for 23 months after receiving a four-year sentence for embezzling tens of billions of won of company money. He is eligible for parole as he has served more than half of his time.
The escalating Lotte succession war is beginning to bite into its businesses as the crippled fifth-largest conglomerate is increasingly unable to make timely decisions with its top managers obsessed with securing managerial control.
Growing anti-Lotte sentiment has also made it difficult for group units to carry on with business because more and more consumers and business partners choose to keep their distance.
The worsening public opinion of Lotte and other chaebol families is feared to spoil the mood for granting special pardons to jailed business tycoons and dampen the government drive to lessen regulations on the activities of large companies.
According to chaebol insiders, Wednesday, several of Lotte Group's key projects pushed by Chairman Shin Dong-bin may hit a snag as he has to focus all his attention on defending his managerial control from his father and group founder Shin Kyuk-ho and his older brother Dong-joo.
Among others, the group's plan of taking Lotte Data Communication public this year has run into trouble because it is impossible for Dong-bin and other company shareholders to reach a consensus on how to list the group's IT unit on the local bourse. The group has been pushing to list the company since 2013.
Dong-bin holds a 7.5 percent stake in the unit, while Dong-joo and Young-ja, the eldest daughter of the Lotte founder, have 4 percent and 3.5 percent, respectively.
It is almost impossible for Lotte Data Communication to be listed on the stock market when its major stakeholders are engaged in a management dispute, said an executive at one of the country's major business associations. "The ongoing family feud at Lotte Group is feared to have adverse effects on the group's businesses."
The management row has also put Lotte Group in a difficult position when it desperately needs to renew licenses for operating two duty free shops in Seoul. Currently, the group runs the country's largest duty free store near its main department store in downtown Seoul, and another at the Lotte World Tower in southern Seoul.
It has to renew the licenses every five years from the Korea Customs Service, but Lotte may face difficulty in doing so in light of the worsening public opinion.
"The family infighting will not help Lotte renew its duty free licenses," the executive said. "Founding family members really need to sit down and resolve the problem before the situation gets any worse."
In particular, the group has aggressively been expanding its retail business across Asia, he said, adding that its overseas ventures could lose momentum unless the founding family members put their house in order.
Lotte has also been seeking to build a comprehensive resort complex, including a foreigner-only casino, in the nation's second-largest port city of Busan. To do so, it needs to obtain a wide range of approvals from the central and municipal governments. But the group may have a harder time pushing ahead with the project.
Lotte dispute could spoil pardons for jailed tycoons
The executive said the family mudslinging at Lotte Group could make President Park Geun-hye reluctant to offer special pardons to heads of large business groups who are currently behind bars amid the increasingly unfavorable public sentiment toward chaebol.
In July, President Park made remarks hinting that special pardons will be granted to business tycoons on the 70th anniversary of Korea's independence from Japan's colonial occupation (1910-1945) on Aug. 15.
Since then, Park Yong-maan, chairman of the Korea Chamber of Commerce and Industry (KCCI), and business leaders have demanded that jailed businessmen be pardoned and given another chance.
"Lotte's management infighting may dampen the mood for pardoning jailed businessmen," he said. "This could also weaken the government deregulation initiatives as more people call for rules to force conglomerates to improve their governance structure and management style. So it is everyone's best interests for Lotte to settle the situation as quickly as possible."
SK Group, in particular, has been working hard over the past few years to have its chairman, Chey Tae-won, released from prison.
Chey has been in prison for 23 months after receiving a four-year sentence for embezzling tens of billions of won of company money. He is eligible for parole as he has served more than half of his time.
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