The head of South Korea’s Lotte Group yesterday vowed a new era of corporate governance and transparency as he apologized for the family feud engulfing the beleaguered retail giant.
In an address broadcast live on TV, group chairman Shin Dong-bin also sought to deflect growing anti-Japanese sentiment surrounding Lotte, which was founded in Japan, but does 80 percent of its business in South Korea.
Talking in accented Korean, the native Japanese speaker twice bowed deeply before the cameras in a show of contrition for the bitter and very public battle for corporate control that has pitted him against his father and elder brother.
“The current dispute has occurred as we have failed to make efforts to improve corporate governance and enhance transparency,” Shin said.
“We will be bold in reform in order to address concerns held by the people of Korea, our shareholders, contractors and employees,” he added.
At stake in the Lotte feud is control of a sprawling conglomerate with 80 units across South Korea — spanning retail, amusement parks, hotels and chemicals — and total combined assets of about US$90 billion.
Among other reforms, Shin said he would push for the public listing of the conglomerate, which effectively controls the South Korean business, while also streamlining the group’s complicated web of cross-holdings to enhance transparency.
“Lotte belongs to Korea,” the chairman said, stressing that the group’s South Korean interests dwarfed the Japanese-based side of the business in terms of employee numbers and sales.
“There has been little flight of capital back to Japan,” Shin said, adding that earnings made in South Korea had been plowed back into the domestic business.
Lotte was founded in Japan in 1948 by Shin Dong-bin’s father — South Korean-born Shin Kyuk-ho, now 92 — and grew from a seller of chewing gum to a confectionary giant. It expanded to South Korea after Tokyo and Seoul normalized relations in 1965.
The row within the Shin family has fanned the embers of the anti-Japanese public sentiment the group has long contended with in South Korea — largely due to the family members’ awkwardness with the Korean language.
The battle for control of the conglomerate has pitted Shin Dong-bin against his father and his elder brother, Shin Dong-ju, with accusations of dirty tricks and attempted boardroom coups.