Slowly but clearly, he drew a line between Lotte’s past and the present, reaffirming that the 90 trillion won ($77.5 billion) empire belonged to Korea, not Japan. And that he himself is also Korean.

“Lotte is a company born in Korea and (it) belongs to Korea,” Shin said in his heavy Japanese accent.

The chairman had been called to testify, but the session became Shin’s public debut as the self-appointed successor who took control over Lotte’s dual operations in Korea and Japan against his aging father’s wishes.

Projecting himself as the final victor, the chairman claimed the brutal succession battle was over and he was the only leader capable of ushering in a new era for Lotte.

“The war of princes is over. It is not going to happen again,” he said in a nationally televised session.

Despite this, Shin still seems to be at war.

The uncertainty of his leadership over the retail giant is once again growing, fueled by prosecutors’ surprise probe this month into his family and aides. They are suspected of creating slush funds and lobbying politicians for business favors.

The ongoing probe has severely shaken Shin’s vision of a new Lotte as well as hampered restructuring efforts, including a planned initial public offering of the hotel unit that is the de facto holding company of Lotte’s Korea operation.

His elder brother Shin Dong-joo, who claims to be the legitimate heir, has also initiated a fresh round of the succession battle.

“The (succession) war is not over yet,” said Jeong Seon-sub, head of Chaebul.com, a conglomerate tracking research firm in Seoul.

“Shin Dong-joo has bigger stakes in Lotte Holdings and was appointed heir by Shin Kyuk-ho, his father and the founder of Lotte. Shin Dong-bin has played down that part, calling it madness,” he said.

Rumors are circulating that the ultimate target of the prosecution’s investigation is the Lotte chairman himself. Some speculate that it was likely his brother who handed over evidence to prove wrongdoing. 


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If found guilty, the chairman might lose everything he has fought for.

Despite his hard-won image as a proven leader, the fundamental questions that Shin thought he had answered appear to be returning to haunt him.

“The questions of legitimacy and legality over his leadership will follow him around to the end,” Jeong said.

“Lotte has no tomorrow if the two keep fighting.”

Origins of the feud

Until 2011, the two brothers appeared to have a harmonious relationship, with each of them overseeing their own domain under the guidance of their father, who called himself the general chairman.

Shin Dong-bin said in an interview in 2010 that the dual management system had been set a long time ago, with Lotte Korea under himself and Lotte Japan under his brother.

But his father did not reveal who would take the top position in the company until he was deposed by his younger son last year. 

Shin Kyuk-ho’s life as a business tycoon was successful, but pundits say the founder held on to power for too long, instigating the Lotte crisis.

“The core of the Lotte crisis lies in the owner family,” said Kim Woo-chan, a management professor at Korea University in Seoul.

“There are certain governance structures within family enterprises (such as giving a clear picture of who is the successor). But Lotte has none,” he said.

Hence, Lotte with its two “princes” ended up in dire straits.

It started in January last year when Shin Dong-joo, the former head of Lotte Japan was ousted from the board of Lotte Holdings. Many viewed the incident as a final decision by the 93-year-old founder to pass the baton to his younger son Shin Dong-bin, and not Shin Dong-joo.

However, on July 27, the founder appeared to have changed his mind as he fired Lotte Holdings board members, including Shin Dong-bin. The following day, the board voted to oust the founder from his chairmanship of the empire’s pinnacle Lotte Holdings.

Shin Dong-joo struck back, claiming his father was enraged with Shin Dong-bin for hiding fiscal records to conceal losses inflicted by Chinese operations.

He said that his sacking had been illegal.

Then, Shin Dong-bin, through another shareholders meeting, stripped his elder brother of his registered executive position in the company, leaving him no chance of gaining a foothold in Lotte Group Korea or Japan.

Shin Dong-joo tried to restore himself by establishing his own company, SDJ Corporation, in Seoul. He put himself in the media limelight, accusing Shin Dong-bin of betraying the family and violating moral codes.

However, Koreans turned a cold shoulder to the founder’s firstborn son.

The reaction was due partly to his poor grasp of Korean and mainly because he was literally unknown here at the time, said Park Ju-gun, president of CEO Score, a market research firm.

In terms of stock ownership ratio, Shin Dong-bin owns relatively small stakes in the group’s key affiliates and in Kojunsha, a small Tokyo-based family firm that sits at the apex of the group’s entire governance structure. 

Kojunsha, or Kwang Yoon Sa in Korean, holds a 28 percent stake in Lotte Holdings, which owns 99 percent of Hotel Lotte, the de facto holding company of Lotte’s Korean operation.

Shin Dong-joo holds a 50 percent stake in Kojunsha, while Shin Dong-bin has 38.8 percent.

“Dong-bin faces risks to defend his management rights, according to the governance structure,” Park said. “But Dong-joo could never replace him. He has no foothold here, no one to trust.”