Shin Dong-joo to be grilled in Lotte Group corruption probe

A court appointed a pro bono organization as guardian of the 91-year-old Lotte Group founder Shin Kyuk-ho, deeming him mentally unfit to carry out business operations.

The Seoul Family Court said Wednesday that it appointed The Sun, a nonprofit affiliate of a law firm led by former Seoul High Court head Lee Tae-woon, as Shin’s guardian. Under a limited guardianship, The Sun will have the power to make certain decisions on behalf of Shin.

The request for adult guardianship for Shin was filed last December by his younger sister Shin Jung-sook.

According to the presiding judge Kim Seong-woo, the court chose The Sun rather than a member of Shin’s family because of ongoing battles over the management of Lotte Group and its assets. 

Since last year, Shin’s two sons Shin Dong-joo and Shin Dong-bin have been embroiled in an ugly and public mudslinging battle over control of the group. The question of Shin Kyuk-ho’s mental capacity had been a key issue in that fight, as the elder Shin Dong-joo claimed that the founder had named him to be the legitimate successor of the group. Wednesday’s ruling is expected to weaken Shin Dong-joo’s claim to management of the group.

SDJ Corp., an entity set up by Shin Dong-joo, said after the ruling that it plans to take legal steps to appeal the decision.

Lotte Group released an official statement as well, saying that the group “respects the court’s decision that (Shin Kyuk-ho) requires the protection of the law.”

“The decision will allow (Shin) to protect his health and honor 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 Shin Dong-joo to Shin Dong-bin’s power as chairman.

Meanwhile, prosecutors have resumed their investigation into allegations of illegal transactions and embezzlement at Lotte Group, following the funeral of former Lotte Group Vice Chairman Lee In-won.

Lee committed suicide Friday, when he was scheduled to appear for questioning by prosecutors. Prosecutors placed the investigation on hold until funeral proceedings were complete.

Prosecutors called Shin Dong-joo in for questioning as a suspect on Thursday morning.

He is expected to be questioned on various corruption allegations against Lotte Group including the creation of a slush fund and tax evasion.

A date has not been set for prosecutors to question Lotte Group Chairman Shin Dong-bin.

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