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Tag: Shin Dong Bin

  • South Korea prosecutors to indict Lotte chairman, father and brother in corruption probe

    South Korea prosecutors to indict Lotte chairman, father and brother in corruption probe

    South Korean prosecutors will file charges on Wednesday against Lotte Group’s chairman, Shin Dong-bin, father and brother alleging they committed offences such as embezzlement and breach of trust worth hundreds of millions of dollars at the family-owned conglomerate, as reported on Tuesday.

    Closing a wide-ranging probe into corruption that has convulsed Korea’s fifth-largest conglomerate, prosecutors will announce the results of their investigation into the retail-to-chemicals group on Oct. 19, a prosecution source with direct knowledge of the matter told Reuters.

    The person, who requested anonymity as he was not authorized to speak to the media, declined to comment on whether Shin, 61, will be indicted.

    Shin’s father, the 93-year-old Lotte Group founder Shin Kyuk-ho, and his brother Shin Dong-joo, will also be charged with offences such as tax evasion and breach of trust.

    A Lotte Group spokeswoman declined to comment.

    The probe has constricted management at Lotte, a household name in Korea, since it flared into public in June, derailing plans for billion-dollar deals and freezing expansion of a group with assets worth 103 trillion won (US$92 billion). It also served as the backdrop to the apparent suicide of a leading executive at the group.

    While Shin would be charged with embezzlement of about 50 billion won and breach of trust involving about 175 billion won, he would not be arrested.

    Last month the Seoul Central District Court turned down prosecutors’ request for an arrest warrant for Shin after he appeared at a court hearing, saying it didn’t view detaining the executive as necessary.

    Once indicted, appeals processes could mean Shin potentially faces trial in court for many months.

    A spokesman for the Seoul Central District Prosecutors’ Office could not be immediately reached for comment.

     

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  • Will Lotte Chairman Shin Dong-bin be questioned?

    Will Lotte Chairman Shin Dong-bin be questioned?

    A series of prosecution probes on alleged embezzlement and malpractice in subsidiaries of Korea’s retail giant Lotte Group hints that the nation’s fifth-largest family-controlled conglomerate’s chairman Shin Dong-bin may be questioned as well.A high-ranking official at Seoul Central District Prosecutor’s Office didn’t rule out the possibility that prosecutors may issue an arrest warrant; however, the time hasn’t ripened yet.

    “In prior cases such as SK and Hyosung, prosecution summoned a number of company officials and tracked the flow of funds to secure solid evidence before questioning group owners. I think it is too early to discuss whether or when to call Lotte chairman Shin,” a senior prosecutor told The Korea Times by telephone, Sunday.

    Key Lotte Group affiliates were being probed over their role to create a slush fund to bribe influential local politicians in return for winning advantages to push ahead the group’s fancy business projects and for massive accounting fraud.

    Prosecutors raided offices of Lotte Group, which were immediately reported to the chairman. Prosecutors issued an international travel ban on Shin’s confidants in what officials say is a preemptive measure before questioning the chairman.

    The official said Lotte’s senior executives “intentionally and systematically” destroyed evidence ahead of the raids, raising possibilities that the chairman was earlier informed of these actions.

    “Lotte Group attempted to destroy and hide related documents and evidence when it underwent a tax audit last year,” he said. “We confirmed that the group did the same this time but were able to secure most of the hidden documents.”

    Shin’s house was also raided while he was in the U.S. for business. The chairman is expected to be questioned by prosecutors upon his return to Korea, but some say it’s still uncertain whether the chairman will return next week, as scheduled.

    “The chairman will be notified of developments of the probe by prosecutors and his return date will be fixed according to the situation. The country’s top law firm Kim & Chang supports Shin,” said an official who is involved with the issue, by telephone.

    Prosecutors believe Chairman Shin has connections with his older sister Shin Young-ja, who allegedly coordinated bribery with failed business tycoon and lobbyist Nature Republic CEO Jung Woon-ho. Young-ja was said to take bribes from Jung in return for granting approval for Nature Republic to open its brand shops at Lotte Free Duty stores.

    No way out

    Due to growing uncertainties about the chairman’s destiny, Lotte’s key business plans have been stalled.
    In a statement, Lotte Chemical, the group’s key petrochemical affiliate, said it dropped its ambitious bid to purchase U.S. company Axiall. Lotte Chemical said the decision was mostly due to possibilities that the group may fall into managerial vacuum.
    More importantly, analysts say Lotte Group’s plan to put the Lotte Hotel for the listing in Korea, which has been slated for next month, may be delayed as the investigation is expected to be widen, hurting investor sentiment.

    The listing of Hotel Lotte is one of the reform pledges that Lotte Chairman Shin has made as part of his efforts to improve its corporate image overall.

    “It’s almost impossible to finalize the IPO by July. I don’t even think Lotte Hotel will be able to be listed this year. The initial IPO price for the hotel will be discounted further given the current market situation,” said a local analyst asking not to be identified.

    Meanwhile, the succession feud, which had seemed to come to an end, is seen to enter a second round with the latest prosecutors’ investigation as Shin’s older brother Shin Dong-joo preparing a fresh attack against the Lotte chairman over his alleged misconduct.

    Analysts say the latest probes are believed to hurt the credibility of Chairman Shin as group leader, and Dong-joo may bring up the issue at the shareholders’ meeting of Tokyo-based Lotte Holdings next week, which controls the group both in Korea and Japan.

     

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  • Lotte Group in Indonesian confectionery push

    Lotte Group in Indonesian confectionery push

    South Korean confectionery manufacturer Lotte Group is planning an eCommerce joint venture with one of Indonesia’s largest conglomerates, the Salim Group, within the next few months with the aim of being up and running by early next year.

    This follows a new government policy on eCommerce that opens up a market of nearly 250 million people to foreign brands. According to the Korean media, the deal was formalised when Lotte Group chairman Shin Dong-bin met with Salim Group chairman Anthony Salim in Singapore during an Asia Business Council meeting.
    Under Shin, Lotte has been aggressively expanding its overseas businesses, and the Indonesian confectionery market is considered a key strategic opportunity, reports Deal Street Asia. The company hopes to secure a strong foothold in the eCommerce market through an omni-channel retailing strategy and establishing a stable delivery service via the partners’ offline stores.
    Also planning to introduce products popular in Korea, Lotte first became involved in the Indonesian market in 2008 when it acquired 10 stores of the Dutch discount chain Makro. Lotte has one department store in Indonesia and 41 retail outlets, while Salim Group has 11,000 Indomartconvenience stores. The Salim Group’s businesses cover such sectors as food, distribution, telecommunications, media, automobile manufacturing and property development.

    An eCommerce roadmap has been drafted by the Indonesian government as a basis for guidelines regulating the sector. It covers such aspects as funding, taxation, communication infrastructure, logistics, cyber security, consumer protection and education, with the aim of achieving eCommerce transaction value of $130 billion by 2020.

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  • Lotte Group Founder Loses Japan CEO Title Amid Succession Battle

    Lotte Group Founder Loses Japan CEO Title Amid Succession Battle

    Turmoil has erupted atop South Korea’s largest retail giant Lotte Group, shining a spotlight on one of the biggest family feuds the country has seen.

    The week began with 92-year-old Lotte founder Shin Kyuk Ho and his eldest son flying to Japan to fire a group of senior managers at a key unit, a maneuver that backfired and left the patriarch sidelined the next day. By Wednesday, Shin Dong Bin had successfully fended off his elder brother’s attempt to derail him from taking over control of the group.

    At stake is leadership over a conglomerate with 80 units across Korea, operating everything from department stores, amusements parks to hotels with 112 trillion won ($97 billion) of assets. Though the country saw sibling rivalries tear up Hyundai Group more than a decade ago, power struggles at businesses of Lotte’s size are rarely displayed in public in a corporate landscape dominated by family-run businesses, known locally as the chaebol.

    “It was an unexpected move as everyone had assumed that the founder had already selected Shin Dong Bin as his heir,” said Chae Yi Bai, an analyst at corporate watchdog Center for Good Corporate Governance. “This puts Lotte’s succession plans back in debate.”

    The drama at Lotte Group comes at a time when concerns over dynastic succession is fresh in people’s memories. Less than two weeks ago, Samsung Group narrowly defeated billionaire activist investor Paul Elliott Singer in a hotly-contested proxy fight, paving the way for the founding Lee family to tighten its grip over the nation’s largest conglomerate.

    Back at Lotte, co-chairman Shin Dong Bin apologized to employees on Wednesday for the turmoil brought by the dispute and urged them to put faith in him.

    “I am very sorry for causing uncertainties and turmoil to you all — the corporate value that Lotte has held up for a long time should not be rattled simply by an individual’s family issues,” 60-year-old Shin said in a note to employees, a copy of which was distributed to the media.

    The founder’s act to support elder son Shin Dong Joo, 61, had been unexpected as the younger Shin had been heir-apparent after executive titles including the vice chairman role at the parent group were stripped from Dong Joo in January.

    Lotte declined to make Shin Kyuk Ho or Shin Dong Joo available for comment.

    Shares Spike

    Shares of Lotte’s listed South Korea affiliates spiked on speculation the contesting Shin brothers would snap up the shares to solidify their control, Kim Tae Hong, an analyst at Yuanta Securities Korea Co. said by phone.

    Lotte Shopping Co. rose for a second straight session to end 6.6 percent higher by the close of trading in Seoul, the largest gain since 2010. Lotte Confectionery Co. closed up 4.7 percent, after jumping as much as 16 percent. The benchmark Kospi index ended little changed.

    In an earlier statement sent to media Wednesday, Lotte Group said the older son and his father’s July 27 act to fire executives at the closely held Japan unit Lotte Holdings Co. didn’t follow legal procedures.

    Tokyo-based Lotte Holdings’ board of directors held a meeting a day after to nullify the dismissals, and decided to move the founder into an honorary chairman role, according to the statement. Such a role typically carries no specific duties or voting rights.

    The older Shin brother’s attempt to gain influence over the Japan unit is aimed ultimately at capturing control over the entire group, due to the conglomerate’s shareholding structure, according to Chae.

    Attack Blocked

    “Whoever holds Lotte’s holding companies in Japan pretty much holds the entire group because of how the group’s corporate governance structure is designed,” Chae said. “It’s too early to say who won the crown, but Shin Dong Bin seems to have successfully blocked the attack this time around.”

    The founder holds a 28 percent stake in Lotte Holdings Co., Dong Joo holds 20 percent and Dong Bin has 19.1 percent, while a company called Kwang Yoon Sa holds 27.65 percent, according to data compiled by Bloomberg. Kwang Yoon Sa, a packaging company also based in Tokyo, is said to be owned by the founder, according to the Korea Economic Daily.

    Lotte Holdings spokeswoman Ruka Mizuno declined to comment on the governance structure of Lotte Holdings and Kwang Yoon Sa. when reached by phone, saying the companies aren’t listed.

    Shin Kyuk Ho, born in Ulsan, South Korea in 1922, started Lotte in Japan in 1948 after completing his university studies there. The company started off selling chewing gum in postwar Japan and quickly grew into a major confectionery company.

    When diplomatic relations normalized between Korea and Japan in 1965, Shin began investing in his home country and established Lotte Confectionery Co. in 1967, according to the Seoul-based Center for Good Corporate Governance.

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