Lotte family feud stirs controversy

The Lotte family recently garnered negative publicity regarding its legal issues and radical nationalism. Controversy first sparked in January when Dong-joo Shin, older brother, was stripped of his title as vice chairman of Japan Lotte Holdings, due to suspicion of unproductive work. Six months later, in an attempt to reclaim his title, the older Shin revealed papers signed by his father announcing the dismissal of his younger brother and six other board members. According to The Korea Herald, however, his younger brother dismissed the signaled demotion papers as “null and void.”

According to The Chosun Ilbo, controversy surrounding the family and the retail company have prevented sales growth and provoked boycotts, specifically from The Financial Consumer Agency and Hwalbindan. Both groups cited Lotte Group’s negligence in fulfilling their responsibilities as reasons for the boycott.

“The boycotts are very understandable,” said Sophia Song (10), MUN member. “As a citizen, I am very disappointed in how Lotte is handling their problems. All the company is doing is drawing more skepticism from the public. As a big company, Lotte must prioritize addressing issues pertaining more to the public and present themselves in a more professional manner rather than constantly engaging in a fight amongst themselves.”

Moreover, because the conference during which Dong-joo Shin presented the dismissal documents was not announced beforehand, his actions may be a violation of Korean corporate law. Korea’s jurisdiction states it is illegal to organize a corporate conference without ample prior notice to the board of directors for executives to discuss the topic and decide whether to overrule a proposal. Although Shin’s conference allegedly violated this law, a formal explanation has not yet been publicly released.

“For corporations like Lotte, it is essential to have positive public support because people will stop buying their products or using their facilities [if deemed otherwise],” said Steven Smith, AP Economics teacher. “They need to make their decisions more transparent so people understand that they are not violating any laws. If they are, they are being unfair to the public.”

The controversy heightened when the national identity of the retail company was disclosed to the public. Although Lotte claims to be a Korean company, the corporation has its roots in Japan and is currently under the influence of Kwang Yoon Sa, a Japanese paper company that controls 27.65 percent of Lotte Holdings. The next largest stockholder is Lotte Holdings in Japan, a branch overlooking all Korean and Japanese subsidiaries. Aside from the structure of the company, the Shin family is also personally affiliated with Japan, as Kyuk-ho Shin’s second wife is Japanese. In addition, because the two sons were raised in Japan, they demonstrated their lack of proficiency with the Korean language during broadcast press conferences. Considering the sensitive relationship between the two countries, reports have predicted the recent news will add on to Lotte’s negative attention.

“Negative news will inevitably create impressions harmful to the company,” Eugene Chung (10) said. “The continuous entanglement of problems Lotte is facing makes me uncertain about my support towards the company. I used to buy a lot of Lotte products and visited Lotte World quite often with my friends, but now I don’t know what to do because [Lotte] hasn’t been entirely truthful to us.”

The disputing parties reached a consensus on Aug. 17 when shareholders voted to allow Dong-bin Shin to officially become the chairman of Japan Lotte Holdings. The younger Shin apologized for all inconveniences the conflict caused and made proposals for the firm’s future improvements. Nonetheless, the resolution is not yet set in stone, as Dong-joo Shin may press again to dismiss the board, according to Nikkei Asian Review.