TOKYO/SEOUL, Jul. 28 (Korea Bizwire) — The board of directors of Japan-based Lotte Holdings Co., the de facto holding firm of Lotte Group, voted Tuesday to sack the group’s founder as chief executive and general chairman, group officials in Seoul said, giving his second son control over the retail giant.
At an emergency meeting, the board also named Shin Kyuk-ho, the 93-year-old tycoon who founded the retail-focused conglomerate in 1948, honorary chairman of Lotte Holdings. Shareholders are slated to meet soon to vote on the decision, according to Lotte Group.
The move is seen as part of a power struggle between Shin’s two sons, Dong-joo and Dong-bin, after the younger son, Dong-bin, was appointed as the head of Lotte Holdings earlier this month.’
The founder Shin reportedly arrived at Lotte Holdings on Monday to remove some company executives. The board did not approve the decision, saying it was not processed officially, and reinstated the executives in a board meeting held earlier in the day.
In a statement, Lotte said the move was “one-sided,” stressing that Dong-joo and some other family members took the founder to Japan.
The group stressed that the move to remove the founder from his post as general chairman will not affect his status in Lotte Group’s Korean business.
“The board’s decision will help bolster Chairman Shin Dong-bin’s management of the businesses in Korea and Japan. There is no change in the positions of General Chairman Shin Kyuk-ho and Chairman Shin Dong-bin’s status in Korea and Shin Kyuk-ho will continue to supervise business agendas in both Korea and Japan,” it said.
The founder’s eldest son, Dong-joo, was stripped of his executive titles at three Lotte affiliates in Japan as of January this year, which immediately gave rise to speculation that his younger brother, 60, would be crowned as his father’s successor.
The move came as a surprise as market watchers earlier believed the two sons would each head the group’s operations in South Korea and Japan.
Lotte, the country’s fifth-largest conglomerate, whose business spans from retail to food, started off as a confectionery in Japan in 1948.
Shin established a confectionery unit in his home country in 1967 when renewed ties between Seoul and Tokyo enabled business investments. Since then, Lotte has grown into a massive group that owns 74 affiliates in 20 countries with its annual revenue reaching more than 80 trillion won (US$68.6 billion).
Since last year, the group has been mired in a safety scandal after so-called sink holes and other glitches were reported in the vicinity of the Lotte World Tower, known as the founder Shin’s lifelong ambition, that is set to be the country’s tallest structure upon completion.