Seven top executives being sued in family feud

The feud between the brothers at Lotte is now spilling over to top executives of the group’s affiliates.

Shin Dong-joo, SDJ Corporation chairman and former vice chairman of Lotte Holdings, said on Monday that seven top executives of Lotte affiliates are being sued by Shin Kyuk-ho, his father and founder of the retail
giant, on the grounds of obstructing business.

The executives include Nho Byung-yong, CEO of Lotte Corporation; Lee Won-joon, CEO of Lotte Shopping; and Song Yong-dok, CEO of Lotte Hotels & Resorts.

According to SDJ Corporation, the executives failed to properly report to founder Shin Kyuk-ho, including an investment loss in China. The founder is currently the co-CEO of Lotte Shopping and Lotte Hotel, while he is a registered executive at Lotte Confectionery, Lotte Aluminum and Lotte E&C as well as an unregistered executive at Lotte Chilsung Beverage.

The SDJ Corporation claimed both Nho of Lotte Corporation and Lee of Lotte Shopping downsized the investment loss in China to 320 billion won ($273 million) when reporting to Shin Kyuk-ho.

Both Nho and Lee are strong supporters of the younger son and current Lotte Group Chairman Shin Dong-bin. They especially showed their loyalty to the younger brother when the management control feud between Shin Dong-joo and his younger brother Shin Dong-bin was at its peak.

Lee, of Lotte Shopping, showed his loyalty to the younger brother in July when he made a personal appearance at the company’s press room in central Seoul, for the first time since he was promoted a year ago, to defend Shin Dong-bin against reports the company suffered losses of 1 trillion won in its businesses in China.

Nho of Lotte Corporation displayed his loyalty by praising the leadership of Shin Dong-bin in August at the Lotte World Tower in Jamsil, southeastern Seoul. Nho said Shin Dong-bin was the only person who could lead the “global” Lotte Group.

SDJ claimed the seven executives being sued failed since Oct. 20 to make any report, in person or in paper, despite repeated requests from Shin Kyuk-ho.

Lotte Group argued the executives were not able to report to the founder as people who have no relationship with Lotte, including Shin Dong-joo, remain close to Shin Kyuk-ho.

Shin Kyuk-ho is currently using the 34th floor at Lotte Hotel in downtown Seoul as both an office and residence.

Shin Kyuk-ho has entrusted power of attorney to his eldest son and law firm DW Partners.

Shin Dong-joo’s legal team has been requesting the disclosure of books on Lotte Shopping businesses in China. Shin Dong-joo’s legal representatives claim Lotte Shopping’s overseas businesses, including the one in China, is a complete failure, adding that Lotte Shopping has been engaging in a reckless investment where it has been pouring money into a lost cause.

Shin Dong-bin’s representatives argue the losses from China were largely due to fierce competition and the weakened economy, and not because of mismanagement and misjudgment on its businesses.

Shin Dong-joo also filed a lawsuit last week against Lotte Holdings CEO Takayuki Tsukuda in Tokyo.

BY LEE HYUN-TAEK, LEE HO-JEONG [lee.hojeong@joongang.co.kr]