Lotte projects’ fate uncertain after suicide
The sudden suicide of Lotte Group Vice Chairman Lee In-won on Friday is expected to leave a management vacuum, as he served as de facto top manager of the nation’s fifth-largest conglomerate ever since the group’s chairman, Shin Dong-bin, took the reins of the company in a high-profile feud with his older brother last year.
Hwang Kag-gyu, president of policy coordination at Lotte Group, and So Jin-sei, head of external relations at the group’s policy coordination department, will take over Lee’s role in the interim, according to Lotte.
Observers say the company is highly likely to adopt an “emergency management system,” given that Shin and other executives at Lotte affiliates are still under investigation by prosecutors.
With Lee gone and other company executives under the radar, Lotte may encounter difficulties in making crucial management decisions and completing planned projects this year, which the group had previously dubbed the “year of leaping into global Lotte.”
The late Lee took care of even the most meticulous details at the group and tackled corporate risks. He also led Lotte’s corporate culture improvement committee aimed at overhauling the governance structure of the family-owned chaebol.
“We have heaps of things to get done by the end of this year,” a Lotte spokesman said. “We are completely at a loss over what to do after seeing Vice Chairman Lee pass away so abruptly.”
“He came into work like any other day the day before he killed himself,” another Lotte spokesman said. “Everything will be suspended for the time being.”
Lotte has yet to come up with proper strategies to cope with an upcoming operation suspension of Lotte Homeshopping that is scheduled to go into effect on Sept 28.
The Ministry of Science, ICT and Future Planning last year ordered the home shopping channel to stop running from 8 a.m. to 11 p.m. for six months from September on the grounds that the subsidiary skipped making several crucial reports when applying for an extension to its cable channel operation period.
The company filed a lawsuit earlier this month against the ministry’s order, claiming the penalty would cause 550 billion won ($494 million) revenue loss, and the result is set for release at the end of this week.
Prosecutors are seeking an arrest warrant for Lotte Homeshopping CEO Kang Hyun-koo for a second time after the court in July denied their initial request for a warrant. Kang is charged with lobbying government officials with bribes and forming slush funds.
As the country’s top duty-free shop operator, Lotte also confronts the heavy task of winning back its operation license for the landmark Lotte Duty Free World Tower Store in southern Seoul.
The branch boasted revenue of 380 billion won in the first half of this year, making up 13 percent of combined revenue across all duty-free stores run by Lotte, but it was shut down on June 30 after the group lost its bid for a license in November last year.
Another bid is scheduled for October, and the government is expected to pick four additional operators. Lotte’s competitors will likely be SK Networks, Hyundai Department Store, Eland, Shinsegae Department Store and Hanhwa Galleria.
The Lotte World Tower itself also remains unfinished, and whether the 123-story skyscraper can see completion by its Dec. 22 deadline is now unclear. Set to become Korea’s highest building, the tower has reached 93 percent completion.
Insiders at Lotte Corporation, which is overseeing the construction project, predict the opening will be postponed to next spring. Sales of offices and residence units within the building have yet to begin.
BY SEO JI-EUN [firstname.lastname@example.org]