Lotte founder's eldest son vows not to go down quietly

By Lee Hyo-sik

Shin Dong-joo, the Lotte Group founder Shin Kyuk-ho’s eldest son, is vowing not to go down without a fight in the succession feud with his younger brother Dong-bin, who appears to have solidified his control of the group both in Korea and Japan.

The former vice chairman of Lotte Holdings was defeated at the holding firm’s shareholders meeting on Monday, but said he will continue to pursue what he thinks is the best course of action for the 90-trillion-won business empire.

“I will continue to do what is right,” Dong-joo said in an interview with Japan’s Yomiuri Shimbun, Tuesday.

“I will inherit my father’s management philosophies that place the top priority on valuing employees and business partners,” he said. “My father always said I should be in charge of Lotte’s business in Japan, while my brother manages group operations in Korea. He never allowed either of us to take full control of the group in both Korea and Japan.”

Dong-joo claimed he can more effectively manage Lotte’s operations in Japan than Dong-bin, saying that he knows more about the group’s Japanese businesses.

“I don’t think the current Lotte management is moving in the right direction. My father entrusted me with his voting rights at the Lotte Holdings’ shareholders meeting. He disapproved of two proposals forwarded by Dong-bin,” he said.

A majority of shareholders approved two managerial changes ― hiring an outside director and improving the group’s governance structure, confirming their endorsement of the founder’s younger son.

Dong-joo attended the gathering but left abruptly after finding out he wouldn’t be able to push for a vote of confidence to dismiss Dong-joo, who holds the titles of Lotte Group chairman in Korea and CEO of Lotte Holdings in Japan.

Kwang Yoon Sa, a paper company, and employee shareholders both own one-third each of the holding firm, while the remaining shares are owned by the Shin family, members of the board of directors and other corporate shareholders.

But the former vice chairman said he will try again to remove Dong-bin and his supporters on the board.

“I have rights as a shareholder. I will try to call another shareholders meeting at Lotte Holdings to replace the current management,” Dong-joo said.

He did leave room for a compromise with his younger brother, however. “The door for dialogue is always open. I don’t want to fight my brother. I will advise him when a problem arises and I would like to do the same for other Lotte managers.”

Most chaebol insiders say the Lotte sibling row is likely over, adding that all Dong-joo can do is to take legal action against his younger brother to question the legality of his control of the group.

“The latest shareholders meeting at Lotte Holdings clearly shows that Dong-bin is in full control. He has won the support of employees, members of the board of directors and other corporate shareholders,” said an executive at a major business association. “I think the only option Dong-joo has now is to resort to litigation to weaken Dong-bin’s control of the group.”