Finish this mud fightThe family feud to take control of the Lotte Group, the fifth largest conglomerate in Korea, is heading to the point of no return. The battle between two sons of Shin Kyuk-ho, a 94 year-old Korean-Japanese businessman who founded the sprawling empire of affiliates in Japan and Korea, has turned into a fight between father and son.
In a televised interview on Sunday, Shin Dong-joo - former vice chairman of Lotte Holdings of Japan and the eldest son - said his younger brother Shin Dong-bin was sometimes beaten by his father. The video footage released by the older brother includes a scene in which his father says, “I founded and built Lotte Group. I can’t understand why my second son attempted to remove me from the management.”
The mud fight has led to the plunge of Lotte’s reputation here. On the Internet and mobile platforms, netizens have lambasted the business group for “transferring the profits it earned in Korea back to Japan,” with some urging people to boycott Lotte’s products. In a nutshell, a dirty family feud has made over 200,000 employees anxious about their future. In a country thriving on exports, the question of nationality could be meaningless. Yet, Koreans feel they are being cheated by an anachronistic management system built on blood and secrecy.
The controversy evolves around two questions. One is whether the senior Shin is healthy enough to make rational judgments, and the other concerns who will win the competition to obtain a majority stake in the Japanese company at the top of the governance structure. But the two issues are nothing but family matters. All problems can be solved if the father and his two sons appear publicly, come clean and apologize. There’s no need to resort to foul play or smear campaigns to convince the public.
This shameful family feud basically stems from the business group’s despotic management. With only a 0.05 percent stake, the senior Shin could effectively control as many as 80 affiliates with a combined annual revenue of 80 trillion won ($68.5 billion) through a maze-like cycle of cross-shareholding. Such a bizarre culture must be corrected no matter what.
As it turns out, the Japanese company at the top, which controls Lotte Hotel, a de facto holdings company of Lotte Group in Korea, and 11 investing companies, were all foreign companies and unlisted on the bourse. We wonder if Lotte is a Japanese business group and what happens if this unlisted company decides to pull out. The financial authorities must get to the bottom of this and clear all doubt.
JoongAng Ilbo, Aug. 4, Page 30