Lotte Group founder Shin Kyuk-ho often used to say he dreamt of building a landmark skyscraper that represented the country’s dramatic economic achievement and cultural prosperity -- his vision behind the construction of the tallest building in Korea.
However, according to industry insiders, the 123-story Lotte World Tower was actually built to glorify his own success story -- a self-made man who turned himself into a tycoon of a 90-trillion-won ($74.5 billion) business empire.
Putting his legacy behind, however, the 94-year-old business mogul is being forced to leave the retail-to-construction empire he built 49 years ago. Lotte Confectionery, one of the main pillars of Lotte Group Korea, announced Monday afternoon that it has decided not to rename him as the company’s registered director.
“The company will not reappoint Shin Kyuk-ho as a member of the board of directors as he is not capable of (continuing) management activities,” said Lotte Group Korea, citing his age. “This is a decision made by the board to establish a law-abiding management (structure).”
Lotte Group founder Shin Kyuk-ho (Yonhap)
The decision will be finalized at the shareholders meeting on March 25. Hwang Kak-kyu, a close aide to Lotte chairman Shin Dong-bin, the founder’s younger son, will replace him, they added.
Lotte’s other affiliates, including its hotel, TV home shopping and construction businesses, are likely to follow suit. Currently, Shin is a registered board member for seven Lotte affiliates. Starting with Lotte Confectionery this month, Shin will likely be removed from the board of the seven affiliates by August next year, leading to a dishonorable end to his own rags-to-riches success story.
Born in 1922 in southeastern industrial city Ulsan, Shin started a chewing gum business in postwar Japan in 1948 where he enjoyed great success. In 1967, he returned home with capital he raised in Japan and launched a separate confectionery business here. He named the group after Charlotte, the heroine of an 18th century Goethe novel, with the ambition of making a company that would win people’s hearts, like the lovable character in the timeless classic.
In less than half a century, Lotte has become the nation’s fifth-largest conglomerate and owns 74 affiliates in 20 countries. Its annual revenue reached more than 90 trillion won as of 2015.
Shin’s forced, disgraceful departure is in line with a lengthy succession battle between his two sons -- an ugly fraternal war that he, as a father, failed to stop.
His life as a business tycoon was a success. But he has drawn public criticism for holding on to power for too long.
The bitter competition started to surface last year after Shin Dong-joo, the founder’s elder son who once led Lotte Japan, was removed from his post, and Shin Dong-bin, chairman of Lotte Korea, was promoted to co-CEO of Lotte Holdings, the group’s Tokyo-based holding company. Shin Dong-bin appeared to be on course to succeed his father, until he was fired by his father, who backed his elder brother.
Shin Dong-joo, pushing his father’s wheelchair, said he was the legitimate successor named by the founder. But his younger brother ousted him and won control over Lotte Group Korea. Currently, Shin Dong-joo has no foothold in Lotte Group Korea and Japan, apart from the shares he still holds.
The fraternal war is nearing an end as Shin Dong-bin won shareholders’ support to tighten his grip on Lotte’s businesses both in Korea and Japan.
Pushing his father from the board will consolidate Shin Dong-bin’s position as the successor, according to industry sources.
Shin Dong-bin has argued that his father is unable to make reasonable judgments due to mental health problems. A Seoul family court is reviewing a request to pick a legal guardian for the aging founder -- a decision expected to play a crucial role in wiping out both his father’s legacy and influence within the group.
By Cho Chung-un (firstname.lastname@example.org)