Lotte brothers prepare for showdown in Japan amid probe

[THE INVESTOR] Amid the widening investigation into Lotte Group, a fresh round of fraternal conflict between Lotte chairman Shin Dong-bin and his brother Shin Dong-joo is expected to take place on June 25 at a shareholders’ meeting of the Tokyo-based Lotte Holdings that controls Hotel Lotte, the de facto holding company of its Korea operations.

Shin Dong-joo is expected to propose a motion to oust his brother and incumbent chairman Dong-bin who controls Lotte’s Korea and Japan operations.
 

The previous shareholders’ meeting in March failed to pass motions proposed by Shin Dong-joo to reinstate him as the leader, making his younger brother Shin Dong-bin the unifying chief executive of Lotte Group in both Japan and Korea.

Citing the prosecutors’ investigation in Korea as proof that Shin Dong-bin is unfit to lead, Shin Dong-joo will ask for yet another vote to reinstate himself as the head of Lotte Holdings.

In essence, the vote comes down to the choice of the employees’ association, which holds 27.8 percent of Lotte Holdings and acts as the swing vote. The association is made up of 130 employees who have been working at Lotte for at least 10 years.

The other two-thirds of Lotte Holdings is controlled by Koyunsha, which is controlled by Shin Dong-joo, and company executives, who are influenced by Shin Dong-bin.

Shin Dong-bin -- who is essentially fighting a war on two fronts with his brother on one side and Korean prosecutors on the other -- has agreed to return to Korea directly after the shareholders’ meeting to cooperate with the prosecutors’ ongoing investigation.

Shin Dong-joo has not made any statement about whether he will return to Korea, although he is also part of the widening probe, which has expanded to include questions about transactions with Lotte in Japan.

By Won Ho-jung (hjwon@heraldcorp.com)