Lotte launches governance reform task force

Lotte Group launched a task force on governance reform Wednesday following criticism over its murky ownership structure that was laid bare in a bitter family squabble over control of the retail giant.

The task force, which comprises 20 executives as well as outside attorneys and accountants, is charged with mapping out plans to list Hotel Lotte, the group's de facto holding firm in South Korea, and enhance corporate transparency, Lotte said in a press release.

Lotte, the country's fifth-largest family-run conglomerate, which was founded in Japan decades ago, operates businesses in both South Korea and Japan. Its holding firm, Lotte Holdings Co., is located in Tokyo.

"The establishment of the task force is Lotte Group's first step to reinforce corporate transparency. We hope to recover the trust and hope of the (South Korean) people who love Lotte," Lotte Chairman Shin Dong-bin was quoted as saying.

The task force is part of Lotte's move to bolster its managerial transparency and simplify its complicated governance structure after the ownership feud, involving group chairman Shin Dong-bin and his older brother, Dong-joo, angered consumers and prompted government-led investigations into the family-controlled group.

Dong-bin, who gained the upper hand in the fight after garnering support from shareholders, apologized in a news conference earlier this month, announcing several reform measures, such as listing the hotel unit and disentangling roughly 80 percent of circular shareholdings among group affiliates.

Last week, the group sent letters to potential managers for Hotel Lotte's initial public offering last week, aiming to win approval from board members and shareholders after selecting a deal manager in September.

The hotel unit holds an 8.83 percent stake in Lotte Shopping, a

12.99 percent stake in Lotte Aluminum and an 18.77 percent stake in Lotteria. Meanwhile, Lotte Holdings, the group's Tokyo-based holding firm, holds a 19.07 percent stake in Hotel Lotte, while group investment units called L Investment Company hold a combined 72.65 percent stake.

Hotel Lotte, established in 1973, reaps roughly 84 percent of its sales from Lotte Duty Free, the country's biggest duty-free chain. Its financial and tangible assets are valued at more than 11 trillion won, according to an analysis by HI Investment & Securities. (Yonhap)