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Revision as of 04:13, 19 January 2024 by Itzybella8 (talk | contribs) (→2016 Embezzelment Scandal: minor grammatical changes)(diff) ← Previous revision | Latest revision (diff) | Newer revision → (diff) South Korean multinational conglomerate corporation "Lotte (conglomerate)" and "LOTTE" redirect here. For the Japanese company, see Lotte Holdings. | This article needs additional citations for verification. Please help improve this article by adding citations to reliable sources. Unsourced material may be challenged and removed. Find sources: "Lotte Corporation" – news · newspapers · books · scholar · JSTOR (September 2018) (Learn how and when to remove this message) |
.svg){kind=logo} Logo since 2017 | |
| Native name |
|
|---|---|
| Company type | Public |
| Traded as | KRX: 004990 |
| Industry | Conglomerate |
| Founded | March 24, 1967; 57 years ago (1967-03-24) |
| Founder | Shin Kyuk-ho |
| Headquarters | Songpa District, Seoul, South Korea |
| Areas served | Worldwide |
| Key people |
|
| Subsidiaries | |
| Korean name | |
| Hangul | 롯데그룹 |
| Revised Romanization | Rotdegeurup |
| McCune–Reischauer | Rottegŭrup, Rotte-kŭrup |
| Website | www.lotte.co.kr |
Lotte Corporation is a South Korean multinational conglomerate corporation, and the fifth-largest chaebol in South Korea. Lotte began its history on June 28, 1948, by Korean businessman Shin Kyuk-ho in Tokyo. Shin expanded Lotte to his ancestral country, South Korea, with the establishment of Lotte Confectionery in Seoul on April 3, 1967.
Lotte Corporation consists of over 90 business units employing 60,000 people engaged in such diverse industries as candy manufacturing, beverages, hotels, fast food, retail, financial services, industrial chemicals, electronics, IT, construction, publishing, and entertainment. Lotte runs additional businesses in China, Thailand, Malaysia, Indonesia, Vietnam, Cambodia, Uzbekistan, India, the United States, the United Kingdom, Kazakhstan, Russia, the Philippines, Myanmar, Pakistan, Poland (Lotte bought Poland's largest candy company Wedel from Kraft Foods in June 2010), Australia and New Zealand (Lotte successfully bought 4 duty-free stores in Australia and 1 in New Zealand from JR/Group in 2019).
History
Lotte was founded in June 1948, by Korean businessman Shin Kyuk-ho in Tokyo, Japan, two years after he graduated from Waseda Jitsugyo High School (早稲田実業学校). Originally called Lotte Co., Ltd, the company has grown from selling chewing gum to children in post-war Japan to becoming a major multinational corporation.
Name
The source of the company's name is neither Korean nor Japanese, or even Chinese, but German. Shin Kyuk-ho was impressed with Johann Wolfgang von Goethe's The Sorrows of Young Werther (1774) and named his newly founded company Lotte after the character Charlotte in the novel. ("Charlotte" is also the name of premium auditoriums in movie theatres run by Lotte.)
Operations
| This section does not cite any sources. Please help improve this section by adding citations to reliable sources. Unsourced material may be challenged and removed. (December 2023) (Learn how and when to remove this message) |
Lotte Corporation – is located in Songpa-gu, Seoul and Lotte Holdings Co., Ltd. in Shinjuku, Tokyo. It is controlled by the founder Shin Kyuk-Ho's extended family.
Business
Lotte Group's major businesses are food, retail, chemical, construction, manufacturing, tourism, service, finance, etc.
- Food: Lotte Confectionery, Lotte Chilsung, Lotte Liquor, Lotte Nestle, Lotte Asahi Liquor, Lotte GRS, and others.
- Retail/Entertainment: Lotte Department Store, Lotte Shopping, Lotte Hi-Mart, Lotte Cultureworks, Lotte Cinema, Lotte Super, Lotte On, Lotte Korea Seven, FRL Korea, and others.
- Chemical/construction/manufacturing: Lotte Construction, Lotte Chemical, Lotte Fine Chemical, Lotte MCC, Lotte E&C, Lotte Aluminium, Lotte Ineos Chemical, Korea Fujifilm, and others.
- Tourism/Service/Finance: Lotte Global Logistics, Lotte Rental, Lotte Resort, Lotte Duty Free, Lotte World, Lotte Property & Development, Lotte Capital, Lotte Hotels & Resorts, Lotte Giants, Daehong Communications, Lotte Hotel Busan, Lotte International, and others
Sports
Lotte also owns professional baseball teams.
- Lotte Giants in Busan, South Korea (1982–present).
- Chiba Lotte Marines in Chiba (city), Japan (1969-present)
Lotte R&D Center
- Korea R&D Center : 201, Magokjungang-ro, Gangseo-gu Seoul, South Korea
Controversies
Treatment of Beluga Whales
Lotte Corporation has received negative press attention due to treatment of a captive beluga whale named Bella, currently held in the Lotte World Aquarium Attraction in Seoul. In 2016, Lotte Corporation announced that they would no longer acquire new beluga whales after two of Bella's companions, Belli and Bellu, died in their care. In 2019, Lotte Corporation pledged that they would release Bella from captivity. As of 2023, the Lotte Corporation has come under increasing criticism for keeping Bella in solitary captivity for an extended multi-year period following their announcement. The Corporation has also been criticized by civic groups for a lack of updates or cohesive plan for retiring Bella to a sanctuary.
2016 Embezzelment Scandal
In June 2016, the police conducted a probe into Lotte Corp for a possible slush fund and embezzelment. The Seoul Central District Prosecutor’s Office reported that 240 investigators raided 17 Lotte offices, including its central Seoul headquarters and the homes of founder Shin Kyuk-ho, Chairman Shin Dong-bin and other key executives, with 15 more offices being raided just a week later.
After news of the investigation broke, between June 10 and June 14, Lotte Group firms lost over ₩1.21 trillion (US$1.06 billion) in market value. By October, its value had fallen by 15.8% to ₩7.75 trillion (US$6.77 billion) compared to its June 9 figure of ₩9.26 trillion (US$8.09 billion). Lotte Chemical Corp also withdrew from bidding for Axiall Corp in the wake of the scandal.
On June 13 2016, Lotte Group announced it would withdraw its initial public offering (IPO) for Hotel Lotte, which was scheduled for the following month. The IPO was predicted to garner up to ₩5.2 trillion (US$4.55 billion) which would have been the largest offering in South Korean history. Lotte Group spokesperson Choi Min-ho told the Korean Herald, “we physically cannot meet next month’s deadline to complete the Hotel Lotte IPO given the current circumstances". Despite local press reporting that Chairman Shin Dong-bin was keen to restart Hotel Lotte's IPO in 2020, Hotel Lotte is still yet to go public.
In August 2016, Vice Chairman Lee In-won was found dead in his car with a four-page long suicide note. His death came just hours before he was due to be questioned by prosecutors. Lee was considered the top lieutenant of Chairman Shin Dong-bin. According to a statement released by Lotte Group after his death, Lee "oversaw Lotte Group's overall housekeeping and core businesses and accurately understood the minds of Chairman-in-Chief Shin Kyuk-ho and Chairman Shin Dong-bin".
In October 2016, the Seoul Central District Prosecutors' Office closed their investigation. The probe accused Lotte founder Shin Kyuk-ho, his son Chairman Shin Dong-bin, along his mistress Seo Mi-kyung and two other children of embezzeling ₩146.2 billion (US$127.8 million). In addition, prosecutors claim they committed inheritance tax fraud amounting to ₩115.6 billion (US$101.05 million). A further ₩22 billion (US$19.23 million) of corporate tax was allegedly avoided by Lotte Chemical. South Korean authorities also argued that Lotte Engineering & Construction overpaid its suppliers and then reclaimed the difference, amounting to slush funds worth ₩30.2 billion (US$26.4 million). In total, the allegations of misconduct amounted to ₩375.5 billion (US$328.25 million).
The following year, founder Shin Kyuk-ho was fined ₩3.5 billion (US$3.06 million) and sentenced to four years in prison. At 95 years old, it seemed possible he would spend his last days incarcerated, but he was able to avoid imprisonment due to health issues, eventually passing away in 2020.
The founder's son and Chairman Shin Dong-bin was convicted of the charges of embezzelment and breach of trust, while Dong-bin's older brother was aquitted.
2017 Bribery Scandal
On 17 April 2017, Chairman Shin Dong-bin was charged with bribery. In order to secure a duty-free deal for Lotte, Shin was accused of donating ₩7 billion (US$6.12 million) to a non-profit controlled by incumbent President Park Geun-hye's close friend Choi Soon-sil. On February 13 2018, Shin was fined ₩7 billion (US$6.12 million) and sentenced to 2.5 years incarceration. He was jailed immediately following the sentencing.
Following his conviction, Shin stepped down as Chief Operating Officer of Lotte Group's Japanese-based holding firm but remained on the board of directors.
In October 2018, an appeals court freed Shin from prison after just 234 days, giving him a suspended sentence of 4 years and cancelling the fine. News of Shin's release increased Lotte Group's market value by 4.2%.
A year later, in October 2019, the Seoul High Court upheld the appeals court's decision, arguing that Shin "passively" committed bribery with the understanding that not donating to Choi's non-profit would result in damage to Lotte Group.
Shin Family Feuds
Lotte Group is a Chaebol: a Korean conglomerate managed by a family, passing control from one generation to the next, usually patrilineally through the sons. Founder Shin Kyuk-ho and his Japanese wife Hatsuko Shigemitsu had two sons: Shin Dong-joo (born 1954) and Shin Dong-bin (born 1956). The brothers have struggled bitterly over leadership of Lotte Group.
2015 Power Struggle
In January 2015, Shin Dong-bin co-ordinated the dismissal of his older brother Shin Dong-joo from key positions at Japanese-based affiliates. Then, in July, Shin Dong-joo was ousted from the Vice President position of Lotte Holdings, with his younger brother assuming control. On August 17, shareholders approved younger Dong-bin as sole leader of Lotte Corp, confirming older Dong-joo's expulsion from all Lotte affiliates. As a result of the brotherly feud, investors became hesitant about Lotte's future, with Lotte Chemical's value plunging 13.63%, Lotte Shopping falling by 3.17% and Lotte Chilsung Beverage losing 6.85% in August.
In September 2015, both Hotel Lotte & Busan Lotte Hotel voted to dismiss Dong-joo. In a press conference in October 2015, Dong-joo claimed that his "greedy" younger brother Dong-bin had illegitimately co-ordinated a plot to remove him, announcing he would be taking legal action. Ligitation began in 2017 when Dong-joo filed a lawsuit against Hotel Lotte & Busan Lotte Hotel for wrongful dismissal, seeking renumeration worth ₩879 million (US$768,390.23). The court ruled against Dong-joo, stating there was insufficient evidence of malice, and this ruling was upheld by an appeals court in 2019.
Shin Kyuk-ho's Health & Guardianship
During the peak of the fraternal feud in 2015, it was reported that father and founder Shin Kyuk-ho was deteriorating mentally. The founder was described as "aged" and "having difficulties in judgment" in a statement by Lotte Group. While Dong-bin argued that his father was incapable of making managerial decisions, Dong-joo initially refuted this. However, a year later, an inside source close to Dong-joo revealed that his father had been taking Donepezil, a medication for dementia, since 2010.
In December 2015, the founder's younger sister Shin Jung-sook filed a petition with Seoul Family Court to determine a rightful legal guardian for the 94-year-old. In 2016, the court found that the founder had “limited mental abilities” and appointed guardianship to a pro bono attorney group led by a former chief of the Seoul High Court. Judge Kim Seong-woo stated that guardianship was not granted to any of Shin Kyuk-ho's family members due to the continued clashes over control of Lotte.
Potential Reconciliation
At the recommendation of their mother Hatsuko Shigemitsu, the two Shins met for the first time since the start of their feud at the Lotte Hotel in Seoul in June 2017. The meeting lasted just 10 minutes, according to their cousin Shin Dong-woo, and a reconciliation was not reached on that occasion.
Dong-bin's Conviction
Upon younger brother Dong-bin's incarceration for bribery in 2017, he stepped down as CEO of Lotte Holdings but remained on the board of directors. The position of chairman of Lotte Group was left vacant and the elderly founder was instated as honorary chairman, despite his deteroriating health. Dong-joo called shareholders to vote to remove Dong-bin from the board in June 2018 but the younger brother kept his position. This is the fifth time Dong-joo had attempted to oust Dong-bin: he had previously petitioned for Dong-bin's expulsion in August 2015, March 2016, June 2016 and June 2017, all of which were unsuccessful for the older Shin sibling.
Shin Kyuk-ho's Death
On 19 January 2020, founder Shin Ryuk-ho passed away. Shortly after, on 1 April 2020, the youngest son Shin Dong-bin was named heir and CEO of Lotte Holdings. Dong-joo immediately petitioned shareholders to expell his younger brother due to his bribery conviction's impact on the reputation & market value of the conglomerate. This is represents the sixth time Dong-joo attempted to oust Dong-bin from Lotte Holdings.
In June 2020, upon cleaning out the late founder's Japanese office, a handwritten note was found dating from March 2000 which named his eldest son Dong-joo as his successor.
The Third-Generation Heir
As of 2024, the youngest brother Dong-bin remains CEO of Lotte Group & Lotte Holdings. Local press has reported that Shin Dong-bin's eldest son, Shin Yoo-yeol, is the next heir apparant. In December 2023, the 38-year-old was promoted to Executive Vice President of Lotte Corp. However, Shin Dong-bin is yet to make any formal statement about his children's future in Lotte's management.
See also
- Lotte World Tower
- Shin Dong-bin, also known as Akio Shigemitsu
- Chaebol
References
- "Chaebol rankings seesaw over 2 decades". Yonhap. Retrieved 19 December 2017.
- "Lotte Group founder Shin Kyuk-ho dies at age 99". Yonhap. 19 January 2020.
- "Lotte Duty Free expands into Australia and New Zealand". Inside Retail. 26 March 2019. Retrieved 15 February 2021.
- "Lotte Hotel Seoul – Hotel Facilities, Fitness, Spa, Conference room". www.lottehotel.com. Retrieved 19 August 2017.
- "Korean Chaebols: Lotte. The Origin of the Lotte Name". Retrieved 20 April 2014.
- "Inside the Korean cinemas offering a red-carpet experience". 13 September 2019.
- Jong-young, Nam. "After animal death, Lotteworld says it won't acquire more beluga whales". english.hani.co.kr. Retrieved 24 December 2023.
- Chen, Heather; Kwon, Junhyup (1 October 2021). "This Beluga Whale Has Been Held in a Conglomerate's Aquarium for Years". Vice. Retrieved 24 December 2023.
- Chen, Heather; Seo, Yoonjung (24 December 2023). "Free Bella: The fight to release a beluga whale from a South Korean mega mall's aquarium". CNN. Retrieved 24 December 2023.
- "Civic groups call for release of last beluga whale from Lotte World Aquarium". The Korea Times. 24 October 2023. Retrieved 24 December 2023.
- ^ Jin, Hyunjoo; Lee, Se Young (26 August 2016). "Lotte vice chairman found dead amid probe; suicide suspected". Reuters. Retrieved 26 August 2016.
- Sohn, Ji-young (14 June 2016). "[LOTTE CRISIS] 15 more Lotte affiliates raided in widening probe". The Korea Herald. Retrieved 18 January 2024.
- Choi, He-suk (14 June 2016). "[LOTTE CRISIS] Lotte firms' market cap lose another 400 billion won". The Korea Herald. Retrieved 18 January 2024.
- ^ Sohn, Ji-youn (19 October 2016). "[LOTTE CRISIS] Prosecutors indict five Lotte family members". The Korea Herald. Retrieved 18 January 2024.
- Eun-jung, Kim (19 May 2016). "Hotel Lotte IPO expected to become S. Korea's biggest offering". Yonhap News Agency. Retrieved 18 January 2024.
- 김영원, Kim Youngwon (13 June 2016). "[LOTTE CRISIS] Hotel Lotte withdraws IPO as embezzlement probe deepens". The Korea Herald. Retrieved 18 January 2024.
- Ji-hyoung, Son (4 May 2020). "Lotte chief likely to push for Hotel Lotte IPO to win power struggle". The Korea Herald. Retrieved 18 January 2024.
- ^ "Lotte vice chairman Lee In-won found dead". BBC News. 26 August 2016. Retrieved 18 January 2024.
- Yonhap (22 January 2020). "Funeral service of late Lotte founder held". The Korea Herald. Retrieved 18 January 2024.
- Zhong, Raymond (22 December 2017). "Chairman of Lotte Group Is Convicted of Graft in South Korea, but Avoids Jail". The New York Times. Retrieved 18 January 2024.
- Ju-min Park & Christine Kim (17 April 2017). "South Korea charges ousted leader Park and Lotte chief with bribery". Reuters. Retrieved 18 January 2024.
- ^ Ser, Myo-ja (17 October 2019). "Supreme Court keeps Lotte chairman from jail". koreajoongangdaily.joins.com. Retrieved 18 January 2024.
- ^ Yang, Heekyong (17 October 2019). "Lotte Group chairman stays out of jail as South Korea court ruling upheld". Reuters. Retrieved 18 January 2024.
- Da-sol, Kim (21 February 2018). "Lotte chief steps down as CEO from Japan-based holding firm". The Korea Herald. Retrieved 18 January 2024.
- Kim, Sohee (5 October 2018). "Lotte Chairman Shin Freed as Court Suspends Corruption Sentence". Bloomberg. Retrieved 18 January 2024.
- Minji, Lee (17 October 2019). "(2nd LD) Top court upholds suspended jail term for Lotte chief". Yonhap News Agency. Retrieved 18 January 2024.
- Kim, Hyun-bin (21 January 2021). "Lotte still stays in bad shape". Korea Times. Retrieved 18 January 2024.
- ^ "(2nd LD) Lotte heir vows all-out efforts to end family feud". Yonhap News Agency. 3 August 2015. Retrieved 18 January 2024.
- ^ Son, Jiyeong (8 October 2015). "Disgraced Lotte heir reignites family feud". The Korea Herald. Retrieved 18 January 2024.
- ^ Seung-yeon, Kim (8 January 2019). "Lotte heir loses appeal over dismissal from boards". Yonhap News Agency. Retrieved 19 January 2024.
- ^ Lee, Joyce (30 July 2015). "Lotte Group describes founder as "having difficulties in making judgments"". Reuters. Retrieved 19 January 2024.
- "Top court confirms guardianship over Lotte founder". Yonhap News Agency. 2 June 2017. Retrieved 19 January 2024.
- Ho-jung, Won (30 June 2016). "Lotte Group founder's mental state poses problems for both heirs". The Korea Herald. Retrieved 19 January 2024.
- Chung, Ah-young (22 December 2015). "Demand for guardianship increases". Korea Times. Retrieved 19 January 2024.
- Kim, Sohee (31 August 2016). "Lotte Patriarch Has 'Limited' Mental Abilities, Court Finds". Bloomberg. Retrieved 19 January 2024.
- "Shin Dong-joo asks court for control of father's affairs". Korea JoongAng Daily. 29 December 2016. Retrieved 19 January 2024.
- Ho-jung, Won (31 August 2016). "Shin Dong-joo to be grilled in Lotte Group corruption probe". The Korea Herald. Retrieved 19 January 2024.
- Jhoo, Dong-chan (30 June 2017). "Lotte siblings meet, but with no reconciliation". Korea Times. Retrieved 19 January 2024.
- "Lotte siblings likely to meet again". koreatimes. 7 September 2017. Retrieved 19 January 2024.
- ^ Moon-hee, Choi (29 April 2020). "Brotherly Feud Reignited at Lotte Group". Business Korea. Retrieved 18 January 2024.
- "(LEAD) Jailed Lotte chief fends off elder brother's leadership challenge". Yonhap News Agency. 29 June 2018. Retrieved 19 January 2024.
- Da-sol, Kim (17 June 2018). "Shin Dong-joo to give fifth try to seize Lotte Group, overthrow his brother". The Korea Herald. Retrieved 19 January 2024.
- Sang-Hun, Choe (19 January 2020). "'Chewing Gum Tycoon' of Lotte Group, Shin Kyuk-ho, Dies at 98". The New York Times. ISSN 0362-4331. Retrieved 18 January 2024.
- ^ Jin, Min-ji (29 April 2020). "Shin Dong-joo seeks to oust brother from board in Japan". Korea Joongang Daily. Retrieved 18 January 2024.
- "Lotte founder's newly found will names second son as heir". Nikkei Asia. Retrieved 18 January 2024.
- Park, Anna J. (27 July 2023). "Lotte heir Shin Yoo-yeol leads Japan-based Lotte Financial Corp". Korea Times. Retrieved 19 January 2024.
- Choi Jae-won, Park Chang-young, Park Hong-ju, and Yoon Yeon-hae (7 December 2023). "Lotte Group chairman's eldest son promoted to executive vice president - Pulse by Maeil Business News Korea". Pulse News Korea. Retrieved 19 January 2024.
{{cite web}}: CS1 maint: multiple names: authors list (link) - Ji-hye, Shin (15 April 2020). "[The Heirs (2)] Will Lotte heir follow his father's path?". The Korea Herald. Retrieved 19 January 2024.
External links
- Official website
- Business data for Lotte Corporation:
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| Largest conglomerates in South Korea | |
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| Business Groups with a total asset exceeding 0.5% of the nominal GDP for 2024, as designated by KFTC | |
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