[THE INVESTOR] Amid a looming crisis, Lotte Group chairman Shin Dong-bin on Saturday successfully fended off his brother’s challenge to the throne he seized last year, but he faces bigger threats at home with the prosecution’s investigation closing in on him.

In support of the employees’ association that holds nearly one third of stakes in Lotte Holdings, a Tokyo-based company that controls Lotte’s operation in Korea, Shin once again cemented his leadership against repeated attempts by his elder brother Shin Dong-joo and his claim of being the chosen heir. 



But Shin Dong-bin is confronting much bigger risks if he returns to Seoul, according to industry watchers, citing the prosecution’s widening probe into the retail giant’s alleged accumulation of slush funds, embezzlement and lobbying.

The possibility is high for the prosecution summoning the chairman and his close aides, including Hwang Gak-kyu, head of Lotte’s strategy building unit and So Jin-se, head of external affairs known as the architects of Shin’s global Lotte vision.

Shin is likely to face an overseas travel ban that could possibly give more chances to his brother to sway Japanese shareholders of Lotte Holdings in Tokyo.

The prosecution’s surprising investigation earlier this month has suspended Lotte’s key projects, including an initial public offering of its hotel unit and a bid to acquire U.S.-based petrochemical firm Axiall.

Question remains as to whether the group can complete the construction of the 123-story Lotte World Tower within this year. The chairman also faces growing public antipathy of Lotte over the group’s dark past dealings as well as the bitter succession battle reviving amid the prosecution’s probe.

The chairman reportedly plans to return on a coming weekend.

Before leaving Tokyo, Shin Dong-bin will be meeting with major business partners there as well as financiers to convey the results of the shareholders’ vote and diffuse concerns over the impact of the prosecution’s probe, according to local reports. The move is to prevent shareholders at the employees’ association from withdrawing their support if he gets tied up in a possible travel ban, they added.

Though defeated in Saturday’s vote, Shin Dong-joo appeared confident, drawing a stark contrast to his younger brother who won the battle, but saved his breath from reporters asking questions.

Shin Dong-joo said he would come out on top next time and that also a change had been detected in the employee’s association.

“The ostensible result is the same as the last (two) shareholders’ meetings, but I felt a lot of changes within the inside (of the employees’ association),” said the elder Shin.

“I will fight until the end for the normalization of Lotte Group, and to fire chairman Shin Dong-bin, who illegally stole leadership, and incumbent executives including (Lotte Holdings president) Takayuki Tsukuda and (chief financial officer) Masamoto Kobayashi,” he said.

Despite the elder brother brimming with confidence, a local expert on Korean conglomerates refuted Shin Dong-joo’s claim.

“Shin Dong-bin’s victory was an expected outcome. The results reaffirmed that shareholders in Japan have solid support in him,” said Park Ju-gun, president of CEO Score, a market research firm in Seoul.

“If Shin Dong-bin won the vote by a narrow majority, (ousting him) could be possible. But it was clear the association had strong conviction in his management ability.”

The 130-member association delegates its voting rights to one person, the head of the group. The head of the association, in turn, has lodged the voting rights to a representative close to Shin Dong-bin.

By Cho Chung-un (christory@heraldcorp.com)