Son boots out father in battle for South Korean giant Lotte

Lotte chaebol drama pits brother against brother and scandalises a society which values respect

Shin Dong Bin (centre), Lotte Group chairman and the younger son of Lotte founder Shin Kyuk Ho, is surrounded by the media as he makes his way upon his arrival at Gimpo Airport in Seoul, South Korea. PHOTO: REUTERS

At age 92, Mr Shin Kyuk Ho is one of the oldest patriarchs among South Korea's famed chaebol, or family- owned conglomerates.

A story goes that he dreams of living to the age of 123 - a year more than the world's oldest verified person Jeanne Calment - prompting him to build a 123-storey building in Seoul, which would be the tallest skyscraper in the country when completed next year.

But his world nearly collapsed during the past week, after intense rivalry between his two sons led the younger one to turn against his father and oust him as the general chairman of hotel and retail giant Lotte Group.

A frail-looking Mr Shin was escorted from Seoul's Gimpo Airport in a wheelchair last Tuesday, a haunted expression clouding his face as the media scrum clamoured for comments.

While corporate succession battles are not unusual in South Korea, a son overthrowing his aged father is almost unheard of in a Confucian society where respect is valued.

Mr Shin, who founded Lotte as a confectionery maker in post-war Japan in 1948, has four children with three women.

His two sons - Dong Joo, 61, and Dong Bin, 60 - are from his second marriage to a Japanese woman, after his first wife died. He has two daughters - Young Ja, 73, from his first marriage, and Yoo Mi, 32, from his third marriage to former actress Seo Mi Kyung.

In a video released to the media on Sunday, Mr Shin apologised for the "pitiable situation" facing Lotte Group and lambasted his second son's "unauthorised and unjustifiable" moves. He also vowed to reclaim what is rightfully his, adding that he did not appoint Dong Bin as his heir and that he cannot forgive him for what he did.

Dong Bin, who is chairman of Lotte Group, apologised yesterday in his first public statement since ousting his father. Returning from Japan, he vowed an all-out effort to normalise the situation, and had a meeting with his father.

The ongoing drama is the latest in a string of scandals to hit Lotte Group - after structural defects and safety lapses rocked its newest department store Lotte World Mall, corruption charges cast doubt over the management of its home shopping channel, and a massive data leak at its credit card affiliate shook consumer confidence.

Lotte Korea was established in 1967, almost two decades after it first started selling chewing gum and snacks in Japan.

Mr Shin then grew the business into a 90 trillion won (S$106 billion) empire spanning food, retail, hotel, finance, construction and petrochemicals, with a global presence stretching from Asia to the Middle East and Europe.

In recent years, with growing concerns over Mr Shin's health, there has been speculation about which son would take the reins and helm the fifth largest family-owned conglomerate by assets in South Korea.

Both sons own about the same amount of shares in the various affiliates under the group.

Dong Joo, who was in charge of Lotte's confectionery-centric operations in Japan, was originally considered the heir apparent due to seniority, but the younger Dong Bin proved to be a strong contender by aggressively driving Lotte Korea's successful overseas expansion.

When news emerged that Dong Joo was forced to resign as the vice-chairman of Japan-based Lotte Holdings in January and later replaced by his brother, speculation was rife that Dong Bin had usurped the crown prince title.

According to local media, the father was not pleased to learn that Dong Joo did not report new investment and that he had started buying shares in a bid to increase his clout in the group.

To win back his father's support, Dong Joo flew to Seoul and spent months pacifying him and seeking his forgiveness, reports say.

He finally succeeded.

On July 27, Mr Shin was accompanied by Dong Joo and his elder sister Young Ja to Tokyo, where the patriarch ordered six board members, including Dong Bin, to resign.

But his decision was overturned the next day by his second son, who called for an emergency meeting and got board members to agree to sack his father as general chairman and relegate him to the figurehead role of honorary chairman.

Lotte Group, which is representing Dong Bin, questioned if the founder's mind was sound enough to make the call, while Dong Joo claimed in interviews that his brother manipulated information to undermine him. He also alleged that Dong Bin did not report severe losses incurred in China to their father.

Mr Shin's younger brother, Sun Ho, 82, vouched for him, saying the patriarch was able to make rational decisions.

Yesterday, Dong Bin vowed to resolve the internal conflict and normalise the group's operations.

Observers are warning that the very public fight will further undermine Lotte Group's already tarnished image.

Ruling Saenuri Party representative Suh Chung Won yesterday said that "people are enraged" by the mudslinging and disregard for the economic ramifications, and that the scandal highlighted an outdated management system.

The JoongAng Ilbo newspaper was also critical of the affair. "Founder Shin once said, 'A company should not be shaken by family feud.' But no one can believe those words now. The family friction at Lotte will surely fuel public antipathy towards chaebol," the newspaper said in an editorial.

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A version of this article appeared in the print edition of The Straits Times on August 04, 2015, with the headline Son boots out father in battle for South Korean giant Lotte. Subscribe