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By Choi Kyong-ae
After the revelations that the sons of Lotte Group founder Shin Kyuk-ho failed to report their investment decisions and heavy losses to their father, Lotte's ongoing succession battle is turning into one of the ugliest examples of family mudslinging at a Korean conglomerate.
"In an upcoming shareholders' meeting at Lotte Holdings, our chairman Shin Dong-bin will protect his current position as chairman of Lotte Group in Korea and CEO of Lotte Holdings in Japan on the back of friendly shares," a Lotte Group spokeswoman said Friday.
But the conglomerate did not reveal when exactly that meeting will take place.
Lotte Group said more than 50 percent of Lotte shareholders will support Dong-bin in the escalating succession war with his elder brother Dong-joo.
In an interview with the Nikkei this week, Dong-joo said he was planning to ask for the dismissal of the Lotte Holdings board at the shareholders meeting.
The two warring siblings' parents, Shin Kyuk-ho and his Japanese wife appear to have the deciding vote as they have a combined 25 percent to 30 percent in Kwang Yoon Sa, an asset management company set up by Kyuk-ho in Japan.
Kwang Yoon Sa owns a controlling 32 percent stake in Lotte Holdings. Dong-joo and Dong-bin own a 30 percent and a 25 percent stake in Kwang Yoon-Sa, respectively, according to media reports.
The chairman and his older son could not be reached for comment.
In recent months, Dong-joo has stepped up his bid for control of Lotte's Japan business as well as operations in Korea.
In January, Dong-joo was kicked out of Lotte's Japan business after his father found out he did not report an investment in a new business to him. Since then, he has repeatedly asked for forgiveness from his father and a second chance in the group. His repentance was eventually accepted.
This week, the internal battle at Lotte took a turn for the worse as the younger son Dong-bin questioned his father's mental capacity in making key decisions as his elder brother Dong-joo brought the 92-year-old founder to Japan to oust Dong-bin in a board room coup.
On Monday, Lotte Group General Chairman Kyuk-ho, Dong-joo and daughter Young-ja went to Japan in a failed attempt to dismiss Dong-bin and five other executives from the board of Lotte Holdings, the de factor holding company of Lotte Group.
Shin Kyuk-ho's decision to dismiss his younger son came after Dong-bin accumulated investment losses worth 1 trillion won ($853 million) in Chinese operations and then did not report the details to his father, said reports.
The following day, Dong-bin travelled to Japan to hold an emergency board meeting at Lotte Holdings to keep both his titles. The board also voted to change the founder's position to honorary chairman from general chairman to prevent him from engaging in management decisions.
"Shin Dong-joo and other family members urged the general chairman who has difficulty making judgments due to his advanced age to make an official announcement on the dismissal of Dong-bin and five others without holding a board meeting. Directors of Lotte Holdings' board didn't accept the announcement," Lotte Group said in a statement.
The other Shin family members hold the key to end the succession battle. It is not known how much stake the founder's wife, daughter and other family members have in Lotte Holdings.
The founder's Japanese wife and younger brother Shin Sun-ho who runs noodles maker Sansas in Japan came here Friday, with Dong-bin staying in Japan. Lotte said they came here to attend the memorial services on Friday night for the late father of Kyuk-ho. But it remains to be seen what role they will take in the internal sparring.
Shin Kyuk-ho founded Lotte in Japan in 1948 and later expanded into Korea where succession wars are not rare in conglomerates.
In 2013, Lotte's Korean operations led by Dong-bin posted 55.42 trillion won in sales, dwarfing 4.57 trillion won in its Japan businesses then led by Dong-joo.
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