Lotte founder, 93, gets legal guardian

Court appoints law firm instead of family member amid tussle for control of empire

Lotte Group founder Shin Kyuk Ho's elder son Shin Dong Joo (centre) is in a bitter fight with his younger brother to wrest control of the family-run conglomerate, which spans 93 companies.
Lotte Group founder Shin Kyuk Ho's elder son Shin Dong Joo (centre) is in a bitter fight with his younger brother to wrest control of the family-run conglomerate, which spans 93 companies.PHOTO: REUTERS

SEOUL • A South Korean court appointed a law firm as the legal guardian for the Lotte Group's founder, dealing a blow to his elder son's efforts to regain control of one of South Korea's largest conglomerates.

The Seoul Family Court said on Wednesday it concluded that Lotte patriarch Shin Kyuk Ho, 93, has "limited mental abilities" to work due to illness and age.

It appointed a local law firm, The Sun, to be his guardian, deciding against naming a family member because of a "family conflict".

The ruling is the latest development in an ongoing family feud that has rocked one of the most well-known corporate names in South Korea and Japan.

The founder's two sons have been in a bitter fight to wrest control of a family-run empire that spans 93 companies generating more than US$86 billion (S$117 billion) in annual revenue.

The elder son, Mr Shin Dong Joo, has been trying to oust his younger brother Shin Dong Bin, who took control of the conglomerate last year in a boardroom coup.

The older brother argued that his father intended to pass the helm to him and distributed videos of the father saying the conglomerate should be run by his elder son.

Shortly after, the founder's younger sister Shin Jung Sook filed a petition with the court, questioning her brother's mental capabilities and requesting that a legal guardian be appointed.

The older brother has "lost his weapon", said Mr Park Ju Gun, president of corporate watchdog CEO Score in Seoul.

With the court's decision, Mr Shin Dong Joo now has to get the consent of the legal guardian to assert his case.

The patriarch's legal representative plans to appeal against the decision, said his spokesman.

Lotte Group, controlled by the younger son, said it supported the court ruling.

"The decision will allow (the elderly Shin) to protect his health and honour through proper treatment and legal protection," the statement read.

"At the same time, Lotte Group hopes that the decision will put to rest unnecessary controversy and concerns about Lotte Group's management," it said, alluding to the ongoing challenges by the older brother to the younger brother's power as chairman.

The court decision also comes as Lotte Group reels from last week's death of its No. 2 executive.

Mr Lee In Won's body was found just hours before he was scheduled to be questioned by prosecutors investigating allegations of slush funds, embezzlement and tax evasion at the group.

The vice-chairman's death, tentatively labelled a suicide by police, followed last month's arrest of Ms Shin Young Ja, sister of Lotte Group's chairman, on charges of bribery and embezzlement.

Ms Shin is accused of taking kickbacks from a cosmetics maker for preferential treatment of its products in Lotte duty-free shops, as well as embezzling more than US$3.5 million from a company owned by her son.

She has denied the allegations.

Meanwhile, the probe continues.

Mr Shin Dong Joo went to the Seoul prosecutors' office on Tuesday for questioning after being summoned.

Prosecutors have reportedly ordered the founder's third wife and her daughter, who are living in Japan, to return to Seoul for investigation into charges of tax evasion.


A version of this article appeared in the print edition of The Straits Times on September 02, 2016, with the headline 'Lotte founder, 93, gets legal guardian'. Subscribe