Lotte Executives Support 2nd Sons Power Grab
kpride, Aug. 4, 2015, 9:40 a.m.
The heads of Lotte Group units said Tuesday that they support Shin Dong-bin, the younger son of Lotte Group founder Shin Kyuk-ho, as the leader of South Korea's fifth-largest conglomerate amid an escalating power struggle between the father and his heir apparent.
"We feel a sense of responsibility, and we are sorry for causing public concern over this unsavory controversy," Noh Byung-yong, head of Lotte Corp., said in a statement issued after a meeting with the heads of 37 Lotte units in Seoul.
"We support Chairman Shin Dong-bin who has led Lotte Group and showed management accomplishments. We also respect founder Shin Kyuk-ho who has contributed to the economic development of South Korea."
In Tokyo, Takayuki Tsukuda, chief executive of Lotte Holdings Co., the holding company of Japan-founded Lotte Group, also stood by Dong-bin. "Lotte Group's dual management system in Korea and in Japan is very stable," Tsukuda told reporters in a press conference held in Tokyo. "We will not allow the separation of Lotte Group."
Tsukuda has managed the Japanese units since 2009, while Dong-bin has focused more on the Korean business. The feud between the scions of the group founder over the control of Lotte Group has been escalating since it flared up last week. On July 27, Dong-joo tried to sack his brother from the board of Lotte Holdings based in Japan at the behest of his father. A day later, Dong-bin, who virtually controls both the South Korean and Japanese operations, countered and dismissed his father as general chairman of the holding company.
In January, Dong-bin took the helm at the Japan-based holding company after ousting his brother Dong-joo from key positions at affiliates in Japan. The 93-old father was outraged by the move, with the fight between the two brothers evolving into a power struggle between the father and his younger son.
The three family members had a short meeting on Monday in Seoul but failed to resolve the conflict, raising concerns about the future of the conglomerate whose business spans from amusement parks and hotels to department stores in South Korea and Japan.
Despite the row, Dong-bin kept conducting his duty as a top businessman. On Monday, he called for maintaining discipline among his employees and visited the construction site of the 123-story Lotte World Tower set to be South Korea's tallest structure upon its completion in 2016.
On Tuesday, the second son visited a group training center for recruits in a town 55 kilometers south of Seoul and met with a group of new employees. The intensifying family feud is feared to throw a wrench into the group's major projects, including the initial public offering (IPO) of Lotte Data Communication Co. The company has pushed the IPO of the IT solution unit for nearly two years.
In November, Lotte Duty Free, the biggest duty free chain in South Korea, will face a review of its two downtown duty free licenses by the customs authorities. Lotte Duty Free runs three duty free shops in Seoul.