Lotte chairman flies off to JapanLotte Group Chairman Shin Dong-bin left for Japan on Friday immediately after the Seoul Central District Court suspended his prison sentence on multiple embezzlement convictions.
Although Lotte Group said Shin traveled to Japan to attend the funeral of his 93-year-old father-in-law Yoshimasa Ohgo, the former chairman of Japanese construction firm Taisei Corporation who passed away on Thursday, Shin is also believed to be meeting with major investors in Japan to further solidify his control of the group.
Shin’s wife Manami Ohgo is the eldest daughter of the late chairman.
After the funeral, Shin is expected to meet Lotte Holdings’ officials in Japan as well as other Japanese business executives to explain the Seoul court’s ruling as well as Lotte’s future plans.
It is likely that Shin will be meeting with Lotte Holdings’ Co-CEO Takayuki Tsukuda at the funeral.
Lotte Groups’ top executives including Hwang Kak-gyu, co-CEO of Lotte, as well as So Jin-se, head of the Lotte Social Contribution team, also left for Japan on Monday to attend the funeral.
On Friday a Seoul court convicted Shin of conspiring with his father and Lotte founder Shin Kyuk-ho to give 11.7 billion won ($10.8 million) worth of income to the elder Shin’s mistress, Seo Mi-kyung, and her daughter.
It did not convict Shin on a charge of embezzlement that related to 47.1 billion won in losses by ailing Lotte PS Net, an ATM manufacturer. Shin was accused of forcing Lotte affiliates to make unfavorable investments in the company. However, the court concluded that was a management misjudgment rather than embezzlement.
While the younger Shin’s sentence was suspended, his father was sentenced to four years in prison and a 3.5 billion won fine. The eldest son of the founder, Shin Dong-joo was acquitted.
In Japan, it’s a common practice for the head of a business to step down for any sort of conviction, even a slap on the wrist like Shin received.
As a result, Shin has to persuade his company’s Japanese shareholders of the different legal system and customs in Korea.
Lotte Holdings owns a 99 percent stake of Hotel Lotte, which is the de facto holding company of the retail giant, and therefore has immense influence on the group. Lotte has plans to change its governance structure by April with Lotte Corp. becoming the holding company and Hotel Lotte merging with Lotte Corp.
When Shin returns to Korea he will have to prepare for an appeal of his conviction and sentence, and finish a executive shuffle for Lotte that has been delayed due to the court case.
BY JEON YOUNG-SEON [firstname.lastname@example.org]