Lee Hyo-sik is Finance Desk editor at The Korea Times. He manages finance-related stories on macroeconomics, banks, stocks, bonds, crypto etc. He is passionate about covering what's happening in Korea's financial industry and explaining it to both Korean and non-Korean readers. You can reach him at leehs@koreatimes.co.kr. Your insights and feedbacks are always appreciated.
Lotte founder's eldest son set to strike back
By Lee Hyo-sik
Shin Dong-joo is seen arriving at Gimpo International Airport, Seoul, Tuesday. / Yonhap
By Lee Hyo-sik
Shin Dong-joo, Lotte Group founder Shin Kyuk-ho’s eldest son, is set to strike back against his younger brother Dong-bin, as the latter seeks to solidify his control of the group.
Dong-joo returned to Korea late Tuesday night after Dong-bin, who holds titles of Lotte Group chairman here and CEO of Lotte Holdings in Japan, vowed not to share management with his elder brother or his father earlier in the day. The chairman also pledged to reduce the influence of Lotte companies based in Japan over Lotte Hotel and other group units in Korea by taking the hotel public.
Lotte Hotel is the group’s de facto holding firm, which has considerable stakes in dozens of group affiliates here. Through Lotte Hotel, Lotte Group in Japan controls the group’s Korean operations.
According to insiders Wednesday, Dong-joo, former vice chairman of Lotte Holdings in Japan, came back to Korea to persuade his ailing father and other family members to support him at Lotte Holdings’ shareholders meeting on Aug. 17.
He desperately needs support from Kyuk-ho, older sister Young-ja and other family members as employee shareholders, members of the board of directors and other corporate shareholders at Lotte Holdings reportedly back Dong-bin as the next group leader.
Dong-joo has vowed to unseat his younger brother, and has filed lawsuits against him, questioning the legality of his control of Lotte Group.
The founder’s eldest son, who returned to Japan on Aug. 7, reportedly filed a petition with the court there in a bid to change the CEOs of nine L-Investment companies. There are 12 L-Investment firms in Japan, which hold a combined 72.65-percent stake in Lotte Hotel. Lotte Holdings owns a 19.07 percent stake in Lotte Hotel.
Dong-bin became the CEO of Lotte Holdings on July 17 and later assumed the CEO titles of 12 L-Investment firms.
However, Dong-joo has been arguing that Dong-bin appointed himself arbitrarily as CEO without due legal process. He said if necessary, he will resort to litigation to weaken Dong-bin’s control of the group.
But Lotte Group officials said Dong-bin assumed the top posts of Lotte Holdings and the L-Investment companies in accordance with company rules, adding that the board of directors and shareholders all approved his appointments.
“The chairman took proper legal procedures in becoming CEOs of Lotte Holdings and 12-Investment firms,” a senior group official said. “It is not yet known what legal actions those opposing the chairman have taken. But as far as we are concerned, the chairman has assumed the top post of the group’s operations in Japan in accordance with the law.”
Lotte Group also said Dong-bin will likely attend the Aug. 17 shareholders’ meeting at Lotte Holdings in a bid to end the ongoing succession feud with his elder brother by passing a wide range of proposals aimed at improving the firm’s governance structure and solidifying his control over Lotte’s operations in Japan.
The chairman reportedly wanted to hold the shareholders’ meeting and settle the ongoing management dispute as soon as possible amid the escalating anti-Lotte sentiment both in Korea and Japan.