Succession feud mars legacy of Lotte Group founder

Fri Aug 7, 2015 6:42am EDT
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By Joyce Lee

SEOUL (Reuters) - Shin Kyuk-ho, the founder of one of South Korea's biggest and best-known conglomerates, has sought to crown his rags-to-riches success story by building the country's tallest skyscraper.

In addition to the Lotte World Tower rising on the banks of the Han river, the 92-year-old is also likely to be remembered for his failure to map out a clear succession plan that has triggered a feud so intense that it has riveted a nation accustomed to warring corporate families.

Despite his advancing years, Shin has kept a tight grip on the retail-to-construction empire he built from a chewing gum maker 67 years ago: employees say he still issues directives, and until recently toured construction sites, including that of Lotte World Tower.

But even though his two sons ran Lotte's operations in Korea and Japan, neither was ever publicly designated as heir-apparent, or holds a substantially larger stake than the other in the Lotte units for which public filings are available in South Korea.

Some analysts say the dispute at the group Shin named after the heroine of an 18th century Goethe novel highlights the perils of having too few people in control of the big conglomerates, or chaebol, that dominate Asia's fourth-largest economy.

Succession woes have beset many such firms in recent years.

"The source of all the trouble is Shin Kyuk-ho's unwillingness to pass on management control through succession, his belief that he must hold on until the end," said Park Ju-gun, head of corporate analysis firm CEO Score.

The fight over Lotte, whose South Korean units generated $70 billion in revenue last year, appears to have started late last year, only to erupt into the public domain last week.   Continued...

Han river and central Seoul are seen in this aerial view taken from 99th floor of Lotte World Tower, which is currently under construction, in Seoul March 4, 2015.    REUTERS/Kim Hong-Ji