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Jailed Lotte chief fends off elder brother's leadership challenge

By Yonhap

Published : June 29, 2018 - 10:35

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SEOUL/TOKYO -- The jailed head of South Korean conglomerate Lotte won the support of Japanese shareholders in a vote on Friday to keep his seat in the boardroom of a crucial affiliate in the group's governance structure, cementing his grip on the retail giant from behind bars.

Lotte Holdings Co., holding firm for Lotte's Japanese affiliates which also has major stakes in the group's Korean units, rejected the motion to dismiss Shin Dong-bin as a board member during its regular shareholders' meeting at its headquarters in Tokyo, according to Lotte Corp., the group's Korean holding company.

Shin Dong-bin, chairman of Lotte Group, right, walks towards a prison bus at the Seoul Central District Court after he was convicted of bribery. (Bloomberg) Shin Dong-bin, chairman of Lotte Group, right, walks towards a prison bus at the Seoul Central District Court after he was convicted of bribery. (Bloomberg)

The motion to dismiss Shin was brought up by Shin Dong-joo, former vice chairman of Lotte Holdings and estranged elder brother of Dong-bin, who has waged an unsuccessful battle against his sibling to gain control of South Korea's fifth-largest conglomerate.

Chairman Shin prevailed in all the four previous votes that have taken place since the managerial feud between the two brothers surfaced in 2015.

The elder Shin was dismissed from his position in Lotte Holdings in 2015 due to a compliance violation and poor management acumen, according to Lotte.

During Friday's meeting, Dong-joo also proposed he be made a board member but again failed to gain approval from shareholders.

"We are relieved at the fact that Japanese shareholders again threw support behind Chairman Shin and the incumbent management despite his absence," Lotte said in a statement. "We hope to promptly overcome the current difficulties to prevent any further instability in the management of Lotte in South Korea and Japan."

The Seoul-based company also urged the elder Shin to stop igniting "unnecessary controversy" thereby causing anxiety among the conglomerate's employees and damaging the group's corporate value.

"I will continue to seek the normalization of Lotte's management to protect its social credibility, corporate value and the interest of stakeholders," Dong-joo said in a separate statement.

Lotte Japan headquarters in Shinjuku. (Yonhap) Lotte Japan headquarters in Shinjuku. (Yonhap)

The latest standoff took place after Shin Dong-bin was sentenced to 2 1/2 years in prison in February for giving bribes to a friend of ousted ex-President Park Geun-hye in return for business favors. He resigned as co-CEO of Lotte Holdings following the ruling but retained his status as a director of the board.

The chairman has sought bail to speak directly at the shareholders' meeting but was thwarted as the court did not deliver its decision on the request. It was the first time since the establishment of Lotte Holdings in 2007 that he had missed the regular gathering.

A delegation of senior Lotte Group executives headed to Japan on Thursday to meet with the management of the conglomerate's Japanese counterpart, carrying a letter from the chairman, which was read out on behalf of him at the shareholders' meeting.

Lotte shares closed on a mixed note on Seoul's main bourse Friday, with Lotte Shopping retreating 1.64 percent and Lotte Chemical jumping 3.11 percent. The KOSPI gained 0.51 percent. (Yonhap)