It is a story that is familiar to Korean drama viewers. Scions of an imaginary chaebol family fight a bitter battle over control of the company that the father or the grandfather had founded. Lots of backstabbing, behind-the-door conspiracies and boardroom intrigues characterize such dramas.
The Lotte Group family feud unfolding before the nation and broadcast almost daily on television news does not deviate much from the drama plots. Except this case involves a real company, the country’s fifth-largest conglomerate to be exact, with real consequences.
On Sunday, Shin Kyuk-ho, founder of the group, said in video footage that he had never appointed his younger son Shin Dong-bin as his heir. “I can’t forgive him for excluding me from the group,” he said and indicated that all measures would be taken to oust him from the post of chairman.
Dong-bin last month took the helm at Lotte Holdings, the group’s holding company, in Japan, dismissing the senior Shin as the general chairman of Lotte Holdings and firing the board members one day after his older brother Shin Dong-joo, who had been dismissed as vice chairman from Lotte Holdings in January apparently on order by his father, took control at the company in a boardroom coup.
Last week, however, Dong-joo produced a document signed by Kyuk-ho saying that the eldest should be named the head of the Seoul-based Lotte Group and that he had never appointed Dong-bin as the heir.
Dong-bin, upon arriving in Seoul from Tokyo on Monday afternoon, held a news conference at the airport where he apologized for the mess and said that a shareholders meeting would be held at the end of the month. He also claimed that the document produced by Dong-joo is not legally valid. Dong-bin then went to meet his father and the two talked for five minutes. Lotte Group officials claim that the father and son reconciled during the meeting.
Both brothers claim that they can win at the Lotte Holdings’ shareholders meeting. In an interview on Sunday, Dong-joo said he would reinstate his father and the board members who had been fired for supporting him, if he wins.
He revealed that Kyuk-ho was angry with Dong-bin for attempting to hide the losses of around 3 trillion won in Lotte Group’s China ventures. He also said the 93-year-old patriarch slapped Dong-bin.
The Japanese unit of Lotte Group previously presided by Dong-joo was mainly focused on confectionery business while Lotte Group in Korea presided by Dong-bin has grown into an 83 trillion won business, its business interests stretching over a vast range.
The muddy fight at the Lotte Group founding family is more than some messy family affair. It has greatly tarnished the group’s image which is bound to hurt its business — there are already calls for boycotting Lotte products. The family feud also illustrates the ills of the outdated mode of corporate governance structure in which the founding family presides over a “kingdom,” according to a foreign observer. Lotte Group should settle the dispute in a manner that is consistent with its standing as the fifth-largest conglomerate.
