Lotte Chairman Shin Dong-bin’s voluntary offer to quit as chief executive officer at its Japan-based holding firm has been approved through a board meeting, the group said Wednesday. 

“Lotte Holdings decided in a board meeting to accept Shin’s suggestion to resign from the chief post with a heavy heart, considering his situation,” the company said in an official statement. Shin will maintain his post as vice chairman and board member.

The finalization comes amidst Shin’s jail sentence by a Seoul Court on Feb. 13 over bribery charges. He has been sentenced to 2 1/2 years in jail. The company explained that it is a common practice in Japan to dismiss a chairman from the post when prosecuted even before the verdict.

With Shin stepping down from the CEO post, some industry watchers expressed apprehension that his vacancy may pave leeway for the Japan-based holding firms to exert more influence in the conglomerate’s Korea operation.

Lotte Group has been operating with an integrated management system from Japan and Korea with the Korean chief in charge of overall supervision. 

Predecessor to Lotte Holdings, Lotte Corp. was founded in 1949 in Tokyo, Japan by Shin’s father Shin Kyuk-ho. It grew to a major multinational company from selling chewing gum during post-war Japan. The Korean branch was established in 1967 as a confectionary company Lotte Confectionary. 

Lotte Holdings owns 99 percent of Hotel Lotte, which the group planned to take public last year, and also a significant stake in Lotte Chemical, a cash cow for the conglomerate.

Hotel Lotte currently owns major stakes in other Lotte affiliates, such as Lotte Construction (41.4 percent), Lotte Aluminium (25 percent) and more.
Shin was the co-CEO of Japan’s Lotte Holdings with President Tsukuda Takayuki, who will now be solely taking on the task, officially.

“We predict ties between Japan-based firm and the Korean leg of Lotte may weaken through Shin’s leadership vacuum, but we vow to continue to communicate with Japanese Lotte to overcome the present situation,” the group said. 

Meanwhile, Shin’s qualification as a board of director at the Japan-based firm will not be affected, according to the company.

By Kim Da-sol (ddd@heraldcorp.com)