Lotte CEOs referred to prosecution

By Yoon Ja-young

Shin Kyuk-ho Lotte Group founder

Lotte Group founder and general Chairman Shin Kyuk-ho has filed a complaint against chief executives of the group’s subsidiaries.

The move is to pressure executives who stood by the younger of his two sons in a power struggle to take the helm of the country’s fifth-largest conglomerate operating in Korea and Japan.

DW Partners, a law firm based in Seoul, said Monday that it had submitted complaints to the Seoul Central District Prosecutor’s Office against chief executives of Lotte Group’s seven subsidiaries, on behalf of the Shin. The seven are Lotte Hotel, Lotte Shopping, Lotte Corporation, Lotte Confectionery, Lotte Aluminum, Lotte Engineering and Construction, and Lotte Chilsung Beverage.

The law firm said that they are charged with work obstruction ― the seven CEOs have allegedly refused to report to Shin since Oct. 20, regarding the group’s business affairs despite continuous demands from Shin to do so. It added that the executives didn’t execute Shin’s other commands, either, obstructing the founder from showing his views on major affairs of the group subsidiaries.

The law firm said that Lotte Shopping CEO Lee Won-joon and Lotte Corporation CEO Noh Byeong-yong also reduced the loss from Lotte’s investment in China to 320 billion won while reporting it to Shin, thus obstructing him from making a correct decision.

When the power struggle between the elder son Dong-joo and younger son Dong-bin escalated, Lotte Group executives in Seoul stood by the younger.

When some media reported that Lotte Shopping had incurred 1 trillion won loss in its operation in China, questioning the managerial capability of the younger son, for instance, Lee visited reporters in person to explain that this wasn’t true.

Noh held a media briefing in August, representing the group executives, to show their support for the younger son. He said “Lotte Korea Chairman Shin Dong-bin is the right person to lead global Lotte Group, the country’s fifth largest conglomerate, as he has proved his managerial capability.”

Meanwhile, Lotte Group’s recent loss of its duty free shop in World Tower is likely to be a hurdle for the younger son’s plan to list Lotte Hotel, which owns the group’s duty free operations, and restructure the group’s corporate governance structure.

The group failed to retain the license from the Korea Customs Service for its duty free shop at the Lotte World Mall in southern Seoul, which analysts project will pull down Lotte’s market share in the country’s duty free market from the current 51 percent.