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Lotte Chairman First Chaebol Head Called before National Assembly Audit
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Lotte Chairman First Chaebol Head Called before National Assembly Audit
  • By Jung Suk-yee
  • September 18, 2015, 00:45
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Witnesses, including Lotte Group Chairman Shin Dong-bin (right), take an oath at the National Assembly’s audit on the Fair Trade Commission on Sept. 17.
Witnesses, including Lotte Group Chairman Shin Dong-bin (right), take an oath at the National Assembly’s audit on the Fair Trade Commission on Sept. 17.

 

The National Assembly audit on Sept. 17 has confirmed Lotte Group Chairman Shin Dong-bin’s control of the group. It was the first time that the head of one of the nation's top 10 conglomerates has appeared before an Assembly audit, attracting the attention of most businessmen this year.

During a parliamentary audit on the Fair Trade Commission (FTC) in the morning, before the attendance of Chairman Shin, Rep. Kim Ki-joon of the main opposition New Politics Alliance for Democracy (NPAD) asked FTC Chairman Jeong Jae-chan who actually controls the Lotte Group. Jeong replied, “I think Shin Dong-bin does. I believe he controls the group under the circumstances.”

With regard to the listing of Hotel Lotte on the Korean stock market, Chairman Shin, who attended the National Assembly audit in the afternoon, said, “We are planning to list it by the second quarter of next year.”

He also said that the plan was approved by his father, Shin Kyuk-ho. Rep. Kim Young-hwan of the NPAD asked whether or not General Chairman Shin Kyuk-ho would oppose the listing of Hotel Lotte, saying, “When Chairman Shin tried to float Lotte Shopping on the local bourse in 2006, General Chairman Shin opposed the plan, saying, ‘Why are you trying to give the company to others?’” Chairman Shin replied to Rep. Kim by saying, “I told him the reason why we should make the company go public two to three weeks ago, and he completely endorsed the plan.”

He also showed a specific schedule for his plan to clean up 80 percent of the cross-shareholding structure by the end of this year. When Rep. Kim Hyun of the NPAD asked Chairman Shin if he can get rid of the cross-shareholding structure earlier than scheduled by the end of Oct., he said, “I personally bought shares of Lotte Confectionery, which were owned by Lotte Engineering & Construction. Also, a task force responsible for overhauling its corporate governance structure was launched, and is working on reform, so I have been told that we can complete the plan by the end of Oct.”

In addition, the chairman flatly said that there will no more power struggle with former Lotte Holdings Vice Chairman Shin Dong-joo. He was asked, “Is there any possibility of a second family feud and succession dispute?” To which Chairman Shin Dong-bin replied, “I think there will be no more [family feuds].”

At the parliamentary audit, the possibility of separating Lotte’s operations in Korea and Japan was brought up. The chairman, however, ruled out the possibility and denied speculations that he would delegate the management of its Japan unit to his elder brother, Shin Dong-joo. He said, “As the chairman who has been delegated to manage the company from shareholders, I don’t think it’s appropriate to split Lotte’s operations in Korea and Japan, because I believe operating them together would have synergy effects and contribute to raising shareholder value.”

Moreover, Chairman Shin explained why the Lotte Group has about 400 cross shareholdings. He said, “There are two reasons. First, we have done a lot of mergers and acquisitions. Since many companies have invested together, cross-shareholding cycles have automatically formed. In particular, General Chairman Shin Kyuk-ho donated his own shares to many firms during the Asian financial crisis in 1997 and the Lehman shock in 2010, and many cross-shareholding cycles came up at that time. I think I am partly responsible for that matter.”

During the National Assembly audit the chairman apologized for causing public concern over a recent bitter family fight once again, and stressed that Lotte is a Korean firm.