Lotte Group chairman Shin Dong-bin on Wednesday was evicted from his executive position at Kojyunsya -- the virtual holding company of Lotte Group in Korea and Japan -- which could deal a blow to his plans of being the sole leader of the 90 trillion won ($78 billion) business enterprise.
He was replaced by Tetsu Isobe as a new board director, while his elder brother SDJ Corporation chairman Shin Dong-joo was appointed representative director of Kojyunsya at the five-member shareholders meeting in Tokyo.
Kojyunsya owns 28.1 percent of Lotte Holdings, which -- along with several other affiliates -- owns more than 99 percent of Hotel Lotte in Korea, which is again at the pinnacle of the complicated cross-shareholding structure of the 80-plus Lotte affiliates here. Such a cyclical shareholding system is designed to cement the founding Shin clan’s grip on the group’s business operations despite having less than 2 percent stake in the entire company.
Dong-bin’s abrupt dismissal has been attributed to Dong-joo who has a higher stake of 50 percent in Kojyunsya, as against his younger brother’s 38.8 percent.
The dramatic dethroning also took place less than two months after Dong-joo was dismissed from all managerial positions at Lotte Holdings’ shareholders meeting on Aug. 17 spearheaded by Dong-bin.
The elder sibling on Oct. 8 declared a legal battle against Dong-bin and his aides demanding his reinstatement and compensation. To be on the safe side, Dong-joo was gifted one share by his father and Lotte Group general chairman Shin Kyuk-ho, who was also fired from Lotte Holdings’ chairmanship after attempting to relegate Dong-bin.
With 50 percent stake plus one share of his father, Dong-joo wields majority control over Kojyunsya, a PR official for SDJ Corp. told The Korea Herald.
“Shin Dong-joo has become the largest shareholder of Lotte Holdings. Alongside his absolute power at Kojyunsya, he has 1.2 percent stake in Lotte Holdings. The combined 29.72 percent-stake in the holding company can enable him to wrest back control over Lotte Group,” the official said. “General chairman Shin Kyuk-ho’s handing one share to Dong-joo is the symbol of the father’s support for the eldest son,” he added.
However, Lotte Group said its chairman’s dismissal from Kojyunsya will have very little impact on the group’s management.
By Bae Ji-sook (baejisook@heraldcorp.com)
