Lotte Group founder and general chairman Shin Kyuk-ho was reelected to the internal board of its retail affiliate Lotte Shopping on Friday, amid the prosecution’s widening probe into the firm’s irregular activities including slush funds.
Despite opposition from some local consultancies, Shin won the majority support at an annual shareholders’ meeting that lasted less than 25 minutes.
Analyst firms Daishin Economic Research Institute and Sustinvest had adviced Lotte shareholders to vote against Shin’s reappointment, citing the number of concurrent posts he holds at Lotte affiliates.
Shin Kyuk-ho
Shin currently holds memberships on boards of 11 units under Lotte Group. His age, at 93, was one sticking point for some shareholders.
Analysts said the reappointment indicates that Shin will stay in management for the time being despite speculations about an imminent succession to his son Dong-bin, the incumbent group chairman.
“It’s difficult to predict a rosy outlook this year due to dim market prospects, but we’ll do our best to turn the crisis into an opportunity to bear fruitful results,” Lotte Shopping CEO Lee Won-joon said during the meeting.
The dividend payments rose some 33 percent to 2,000 won ($1.80) per share from 1,500 won last year, while the annual salary cap remained at 11 billion won.
The shareholders’ meeting came a day after the prosecution launched its investigation into the company’s alleged slush funds. But executives did not comment on the probe during the meeting, according to its spokesman.
The prosecution searched the group to trace the financial accounts of its shopping units ― Lotte Department Store, Lotte Mart and Lotte Cinema ― amid allegations that they received money from unknown sources.
Lotte Shopping played down speculation about corruption, saying in an emailed statement Thursday that “the slush fund allegations are not at all true,” and that the money was used for legitimate purposes, such as recruiting activities, dinner expenses and transportation.
Lotte’s retail operators are also under pressure for the government to reapprove its its home shopping businesses, a regular obligation for TV home shopping business operators every five years.
Market watchers say the reapproval will be tough for Lotte Home Shopping, which recently submitted its application for the license, to pass the Ministry of Science, ICT and Future Planning’s tightened standards, citing its large-scale bribery case last year.
By Suk Gee-hyun (monicasuk@heraldcorp.com)