Lotte battle heats up ahead of Tokyo shareholder meeting
The sibling rivalry over the inheritance of Korea’s fifth-largest conglomerate Lotte Group is expected to intensify again as a shareholders’ meeting of Tokyo-based Lotte Holdings is scheduled Saturday.Shin Dong-joo, the ousted leader of Lotte Holdings and eldest son of Lotte founder Shin Kyuk-ho, is desperately bracing for another battle against his younger brother Shin Dong-bin, current chairman of Lotte Group, in a shareholders’ meeting in Tokyo five days away.
The older Shin is trying to persuade a group of employees who own a 31.06 percent stake in the holding company to team up with him, said Min Yoo-sung, former chairman of Korea Development Bank and a supporter of Shin Dong-joo.
The employee group is the second largest shareholder of Lotte Holdings, with 130 employees who worked for the company for more than 10 years. The group is the casting voter.
“Of the 130 members, about 40 members are suspicious about the current leadership by Shin Dong-bin and Takayuki Tsukuda,” said Min. “[Shin] will meet with each member of the group and keep holding shareholders’ meetings until he wins, even 130 times.”
Tsukuda is the current CEO of Lotte Holdings, a de facto holding company of Lotte’s business in Japan and mother company of Korea’s Lotte Group. Tsukuda is a supporter of Dong-bin.
Lotte Holdings’ top shareholder is Koiyunsya, widely known in Korea as Gwangyunsa, with a 31.48 percent stake. The rest of the shares are owned by some affiliates with a total of 15.6 percent stake, the owner family with a 15.18 percent stake and the executives’ group with a 6.67 percent stake.
If Shin Dong-joo is able to win over the employee shareholders’ association, which is second in terms of share ratio, he might be able to regain his control over the group.
“Beating Shin Dong-bin is my lifetime task,” the older Shin is quoted as saying by Min.
Losing the license for duty-free business last year and the prosecutors’ action are evidence that warns the younger Shin of his dictatorship, Min added.
Lotte Group is facing the biggest crisis in its history as prosecutors investigate it for shady practices, putting a number of impending projects - including corporate governance restructuring - at risk.
On June 10, prosecutors raided the headquarters and 17 major offices of Korea’s fifth largest conglomerate in Seoul to seize evidence of the group’s maintaining of illegal slush funds and possible embezzlement. The investigation comes 11 months after the two sons began a high-profile war over control of the group.
“It is true that much of our documents and data that we submitted to the prosecutors was referred for the current probe,” Min said. “The 16,000-page document about losses made in China helped the prosecutors. Shin Dong-bin cannot achieve what he wants if he keeps ignoring Shin Dong-joo who has a 30 percent stake in Lotte Holdings.”
In March, Shin Dong-joo and his supporters attempted to remove Dong-bin from the board of Lotte Holdings, but failed. Shareholders voted in favor of Shin Dong-bin and he solidified his control over the confectionery giant in the inheritance battle with his older brother.
“Shin Dong-bin, who is at the center of the current crisis, should immediately return to Korea and hold a press conference to explain allegations listed under his name,” Shin Dong-joo said in a statement posted on the Japanese website of his company SDJ Corporation on June 15.
A day earlier, the younger brother told reporters during his business trip to the United States that he is not worried about the upcoming board meeting.
On Saturday, both brothers appeared at a meeting of Lotte Foundation in Japan. Since Lotte Foundation holds a 0.2 percent stake in the holding company, their participation is seen as a strategy to persuade shareholders.
BY LEE SO-AH, SONG SU-HYUN [song.suhyun@joongang.co.kr]
with the Korea JoongAng Daily
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