By Lee Hyo-sik
The succession feud at Lotte Group is expected to take a turn for worse as Shin Dong-joo, the eldest son of group founder Shin Kyuk-ho, is set to launch counterattacks against his younger brother Dong-bin, who appears to have seized control of the group's operations both in Korea and Japan.
Analysts say that Dong-joo, former vice chairman of Lotte Holdings, the holding firm of Lotte Group in Japan, will likely call on the company's board of directors to convene a shareholders' meeting to dismiss Dong-bin and other board members who support him.
Dong-bin became the CEO of Lotte Holdings on July 15.
If Dong-joo fails to do so, he is then widely expected to file lawsuits against his younger brother, questioning the legality of his control of Lotte Holdings and 12 L-Investment companies.
Dong-bin was recently appointed to CEO of all L-Investment firms in Japan, which hold a combined 72.65-percent stake in Lotte Hotel, the de facto holding firm of Lotte Group in Korea. Lotte Holdings owns a 19.07 percent stake in Lotte Hotel.
On Aug. 7, Dong-joo told reporters at Gimpo International Airport, before boarding a flight to Japan, that he will take legal action against Dong-bin in Japan.
When asked about how Kyuk-ho feels about Dong-bin's recent appointment as CEO of L-Investment firms, Dong-joo said that "The group founder became so angry when he heard about it. He said Dong-bin assumed the top posts arbitrarily (without consent from him)."
Dong-joo, who came to Korea on July 29 to garner support from his ailing father, had initially planned to return to Japan with his wife on Aug. 3. But with Dong-bin moving to solidify his position as the next group leader by seizing control of key units, the former Lotte Holdings vice chairman decided to stay here longer to persuade his father, his older sister Young-ja and other family members to support him.
He was reportedly staying with his father the whole time at Lotte Hole in downtown Seoul.
According to chaebol insiders, what Dong-joo will first do in Japan is to contact major shareholders of Lotte Holdings.
Kwang Yoon Sa, which is controlled by Kyuk-ho and his wife Hatsuko Shigemitsu, is the biggest stakeholder of Lotte Holdings with a 27.65 percent stake. The Shin family, members of the board of directors, company employees and other individuals are known to hold the remaining stakes in the holding firm.
According to Lotte Group, the shareholders' meeting may be held this month if Dong-joo calls for it.
"I think if Dong-joo asks for a shareholders' meeting, we have no reason to oppose it," a senior group executive said.
Dong-bin reportedly wants to hold the meeting and settle the ongoing management dispute as soon as possible amid the escalating anti-Lotte sentiment both in Korea and Japan.
The Lotte Group chairman said he has already secured the majority of stakes and will appoint his father as honorary chairman when shareholders meet.
In contrast, Dong-joo has repeated that he could regain control of the holding firm if Kwang Yoon Sa and company employees side with him, stressing that if he kicks Dong-bin out, he would appoint his aides to the board and reinstate his father as the general chairman.
If Dong-joo loses at the scheduled shareholders' meeting, he is widely expected to take the case to court, said an executive at a major business association. "As he said in the past, he will likely file a suit against his brother if he fails to push his agenda at the shareholders' meeting. I think the Lotte infighting will not end any time soon."
Dong-joo has been insisting that Dong-bin appointed himself arbitrarily as CEO of 12 L-Investment firms without due legal process. He also claims that Lotte Holdings' decision on July 28 to strip group founder Kyuk-ho of his board seat and chairmanship was illegitimate.
The succession feud at Lotte Group is expected to take a turn for worse as Shin Dong-joo, the eldest son of group founder Shin Kyuk-ho, is set to launch counterattacks against his younger brother Dong-bin, who appears to have seized control of the group's operations both in Korea and Japan.
Analysts say that Dong-joo, former vice chairman of Lotte Holdings, the holding firm of Lotte Group in Japan, will likely call on the company's board of directors to convene a shareholders' meeting to dismiss Dong-bin and other board members who support him.
Dong-bin became the CEO of Lotte Holdings on July 15.
If Dong-joo fails to do so, he is then widely expected to file lawsuits against his younger brother, questioning the legality of his control of Lotte Holdings and 12 L-Investment companies.
Dong-bin was recently appointed to CEO of all L-Investment firms in Japan, which hold a combined 72.65-percent stake in Lotte Hotel, the de facto holding firm of Lotte Group in Korea. Lotte Holdings owns a 19.07 percent stake in Lotte Hotel.
On Aug. 7, Dong-joo told reporters at Gimpo International Airport, before boarding a flight to Japan, that he will take legal action against Dong-bin in Japan.
When asked about how Kyuk-ho feels about Dong-bin's recent appointment as CEO of L-Investment firms, Dong-joo said that "The group founder became so angry when he heard about it. He said Dong-bin assumed the top posts arbitrarily (without consent from him)."
Dong-joo, who came to Korea on July 29 to garner support from his ailing father, had initially planned to return to Japan with his wife on Aug. 3. But with Dong-bin moving to solidify his position as the next group leader by seizing control of key units, the former Lotte Holdings vice chairman decided to stay here longer to persuade his father, his older sister Young-ja and other family members to support him.
He was reportedly staying with his father the whole time at Lotte Hole in downtown Seoul.
According to chaebol insiders, what Dong-joo will first do in Japan is to contact major shareholders of Lotte Holdings.
Kwang Yoon Sa, which is controlled by Kyuk-ho and his wife Hatsuko Shigemitsu, is the biggest stakeholder of Lotte Holdings with a 27.65 percent stake. The Shin family, members of the board of directors, company employees and other individuals are known to hold the remaining stakes in the holding firm.
According to Lotte Group, the shareholders' meeting may be held this month if Dong-joo calls for it.
"I think if Dong-joo asks for a shareholders' meeting, we have no reason to oppose it," a senior group executive said.
Dong-bin reportedly wants to hold the meeting and settle the ongoing management dispute as soon as possible amid the escalating anti-Lotte sentiment both in Korea and Japan.
The Lotte Group chairman said he has already secured the majority of stakes and will appoint his father as honorary chairman when shareholders meet.
In contrast, Dong-joo has repeated that he could regain control of the holding firm if Kwang Yoon Sa and company employees side with him, stressing that if he kicks Dong-bin out, he would appoint his aides to the board and reinstate his father as the general chairman.
If Dong-joo loses at the scheduled shareholders' meeting, he is widely expected to take the case to court, said an executive at a major business association. "As he said in the past, he will likely file a suit against his brother if he fails to push his agenda at the shareholders' meeting. I think the Lotte infighting will not end any time soon."
Dong-joo has been insisting that Dong-bin appointed himself arbitrarily as CEO of 12 L-Investment firms without due legal process. He also claims that Lotte Holdings' decision on July 28 to strip group founder Kyuk-ho of his board seat and chairmanship was illegitimate.
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