Shin Dong-bin cements his hold
Foreign travelers shop at the duty free shop at the Lotte World Tower in Jamsil District, southeastern Seoul on Sunday, which is closing its doors for the first time this month since the operation started in 1989. Lotte Duty Free failed to prolong its tax-exempt license last year and is bidding to be included in three additional locations scheduled to be announced in October. [NEWSIS]
This marks Shin Dong-bin’s third victory against his older brother Shin Dong-joo, whom he ousted from the family-run conglomerate last year and has cemented his hold on power through the shareholders’ meetings last October and again in March.
The latest meeting was considered an especially vital chance for Shin Dong-joo to regain authority, considering the difficulty the group has been facing due to an intensifying probe against 30 of its affiliates for improper business transactions and lobbying.
Since the investigation kicked off on June 10, Shin Dong-joo has been continuously blaming Shin Dong-bin’s leadership for the current chaos and denouncing him as irresponsible for staying abroad rather than immediately returning to Korea and holding an official press conference.
He proposed at the recent Tokyo meeting to dismiss Lotte Holdings’ current directors, including director Shin Dong-bin and President Takayuki Tsukuda, and to appoint himself as the director of the Japanese company.
Both of his proposals were voted down at the meeting.
“The result reaffirms the shareholders’ trust in Shin Dong-bin and his management,” the Lotte Group spokesman said Saturday. “We feel the shareholders have acknowledged the achievement of the current leaders amid the difficulties the group has gone through.”
Shin Dong-joo, on the other hand, said he spotted some significant changes in the company’s employee shareholders, even though the vote remained unchanged.
“What’s seen on the surface is the same as before,” he said in a statement, “but I felt a lot has changed on the inside.”
He added, “Employee shareholders declared their intention to support the ‘normalization of Lotte Group’ movement after realizing how corrupt Shin Dong-bin and Takayuki Tsukuda’s management has been in the past.”
An employee shareholders association comprising 130 members from the Japan-based company is the second-largest shareholding group of Lotte Holdings, after Kojyunsya, also known as Gwangyunsa, taking up 27.8 percent of the pie. The group is considered a decisive factor in determining the vote result. This time, the association supported Shing Dong-bin.
Shin Dong-joo, however, said he will “fight until the end for Lotte Group’s normalized management.”
Shin Dong-bin may have succeeded in holding onto the leadership for now but he still has his hands full regarding the group’s damaged business and the list of allegations facing the company, including that he created a slush fund and evaded taxes through paper companies.
The widening probe has jeopardized most of the group’s business expansion plans for this year, including the 5.7 billion won ($4.86 million) listing of Hotel Lotte, which was expected to be the biggest public offering in Korean history. Also, the acquisition plan of the U.S.-based chemical company Axiall by Lotte Chemical was withdrawn after the investigation launched.
But above all, it is its duty-free business that seems to have been hit the hardest.
After losing the license to run the tax-exempt shop at the Lotte World Tower in Jamsil District, southeastern Seoul last year, Lotte was planning to acquire a U.S.-based duty-free chain as a backup plan, but the intensifying investigation forced the cancellation of that plan, too.
It also remains to be seen whether Lotte can regain its duty-free shop license, which became possible when the Korea Custom Service recently announced in April that it would allow three more conglomerate-run duty-free shops in Seoul. Hotel Lotte bid for the competition and the final list is scheduled to be announced in October.
Hotel Lotte spokesperson said against all odds, the preparation plan for receiving the license will roll out as scheduled.
In the meantime, the duty-free shop in Lotte World Tower greeted its last consumers on Sunday, closing its doors for the first time since the store opened in 1989.
BY JIN EUN-SOO [jin.eunsoo@joongang.co.kr]
with the Korea JoongAng Daily
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