Roundup: Real-life drama unfolds in family feud of S. Korean Lotte Group over succession

Intrigue, lie, betrayal, secrets about birth and dramatic reversal were essential factors in the past successful South Korean soap operas. A popular real-life drama with at least some of the factors is now unfolding here.

Protagonists are the two sons of Lotte Group founder Shin Kyuk- ho, bitterly sparring over control of South Korea's fifth-largest conglomerate, a multi-national food, chemicals and shopping corporation.

Power struggle among siblings is not strange in the South Korean corporate landscape of family-run conglomerates, but the in- fighting at Lotte seems more dramatic than ever.

The story began on July 27 with the 92-year-old Shin and his eldest son Dong-joo flying to Japan to dismiss Lotte Holdings board members, including the second son Dong-bin, chief executive at the de-facto holding company.

It was unexpected as many assumed the second son to be heir- apparent. Dong-bin was appointed chief executive of Tokyo-based Lotte Holdings last month, while his elder brother lost his vice chairman position from the holding firm in January.

The second son, who has run the group's South Korea business since 2011, fought back a day later by holding an emergency meeting of the board of directors to demote his father to honorary chairman having no specific duties from general chairman overseeing the group's businesses both in Japan and South Korea.

Mudslinging started. Dong-bin, 60, said through the group's PR department that the botched attempt to sack him as the holding firm's chief executive was instigated by his elder brother and that his father was manipulated given his father's mental incapacity. He claimed that the founder had difficulties in making judgment due to his old age.

Dong-joo, 61, disclosed a document that strips his younger brother of all his positions at the group, saying it was hand- written by his father. But, his younger brother said it had no legal standing.

"Shin Kyuk-ho fell down a couple of years ago, and since then he has been wheelchair-bound. Shin had difficulties making sound judgments, but the group hasn't revealed it due to the traditional South Korean culture of respect for the elderly," a person with knowledge of the group affairs told Xinhua Wednesday.

The older brother distributed video footage, where his father read a prepared message saying that he had never appointed his second son as heads of Seoul-based Lotte Group and Tokyo-based Lotte Holdings. It was aired Sunday by local broadcasters.

The message amplified suspicions over the 92-year-old's mental capacity as the second son has headed the South Korean business for about four years.

Supporting characters, probably having a key to the victory, appeared. The Japanese ex-wife of the founder came to Seoul, drawing media attentions on which role she would play because she is the mother of the two sons.

Shin Young-ja, the oldest daughter born between the founder and his first wife who already passed away, accompanied his father to Japan last week, indicating her siding with the elder brother.

"She played a major role in the management, but she may have lost in power struggle with his brothers. She now seems to take sides with the elder brother," said the source.

When Dong-bin came back to Seoul from Japan earlier this week, he visited his father. The Lotte Group said the founder received his son business as usual, but the founder's younger brother claimed that the founder yelled at his second son to get the son out of his room.

The first-son side said that his father was enraged with his younger brother for his distorted report on heavy loss in China business estimated at about 1 trillion won (0.85 billion U.S. dollars), but some media reported that it may be impossible given the meticulous nature of the founder.

With the revelations war coming to a lull, the two sons are preparing for a shareholder meeting of Lotte Holdings expected to be held in Tokyo this week. Both sides said of being assured of victory, but nobody can easily be sure of who would be a winner given the complexity in the group's corporate governance structure.

The Seoul-based Lotte Group with 80 units in South Korea is controlled by Lotte Hotel, which is controlled by the Tokyo-based Lotte Holdings. The exact ownership structure of the holding firm was not known to the public as it is an unlisted company based in Japan.

The holding firm is known to be controlled by Kwang Yoon Sa, a Japan-based packaging company owned by the founder and his family members, but the exact corporate governance has been hidden. The group's 80 units also have more complex cross-holdings than any other South Korean conglomerates.

South Korea's anti-trust watchdog reportedly asked the group to report on its ownership structure, but the group was not forcibly required to report on it as the de-facto holding companies are headquartered in Japan.

Lotte was established in Japan in 1948 as a chewing gum maker after the founder, born in South Korea, migrated to Japan under the 1910-45 Japanese colonial rule of the Korean Peninsula.

The founder expanded businesses to his home country after diplomatic ties between South Korea and Japan were normalized in 1965, and set up Lotte Confectionery in Seoul. The Seoul- based group grew faster than the Japanese counterpart to more than 90 billion U.S. dollars of assets in 2014.

The South Korean businesses, which span discount chains, department stores, hotels, amusement parks and chemicals, generated about 70 billion dollars of revenue a year, more than 20- fold the revenue in Japan. Endi