[비즈한국] SDJ Corporation Chairman Shin Dong-joo (former Vice Chairman of Lotte Holdings) has filed a damages suit against his younger brother, Lotte Group Chairman Shin Dong-bin. Since leaving Lotte Group in 2015, Chairman Shin Dong-joo has attempted to return to management every year, but has failed each time. Lotte Holdings executives and employees hold a significant amount of the company's shares, and they have consistently supported Chairman Shin Dong-bin. Shin Dong-joo's attempts to challenge his brother's integrity are interpreted as a means to persuade these employees. However, the business community does not view Chairman Shin Dong-joo’s actions favorably.
Chairman Shin Dong-joo announced on the 4th that he filed a shareholder derivative suit with the Tokyo District Court, claiming 13.45 billion yen (approximately 134 billion KRW) in damages from Chairman Shin Dong-bin, and a total of 965.3 million yen (approximately 9.6 billion KRW) in damages from six Lotte Holdings directors.
Chairman Shin Dong-joo claims that Lotte Group's value has been damaged due to Chairman Shin Dong-bin. This is based on the fact that Chairman Shin Dong-bin was previously sentenced to two years and six months in prison, suspended for four years, for bribing former President Park Geun-hye. Chairman Shin Dong-joo also highlighted the fact that Lotte Shopping023530 was fined by the Fair Trade Commission for violating the Large Distribution Business Act.
Chairman Shin Dong-joo had previously sent a 'demand for accountability' to Japan's Lotte Holdings in April. However, as the Lotte Holdings auditors failed to respond by June 30, Shin took it upon himself to initiate the lawsuit. Chairman Shin Dong-joo stated, "The board of directors caused significant loss to the company by failing to impose substantial sanctions or hold anyone accountable for repeated legal violations and management failures within Lotte Group."
Aside from the damages suit, Chairman Shin Dong-joo has been pushing to participate in Lotte Group management for years. Since his dismissal as Vice Chairman of Japan’s Lotte Holdings in 2015, he has not been able to return to Lotte Group's management. From March 2016 to date, he has attempted to return to management at a total of 11 shareholder meetings, all of which have failed. Even at the Lotte Holdings shareholder meeting on June 27, he proposed his own appointment as a director, but it was rejected.
If Chairman Shin Dong-joo were to be appointed as a director of Lotte Holdings, it could affect the entire Lotte Group. Lotte Holdings is the largest shareholder of Hotel Lotte. Furthermore, Hotel Lotte holds an 11.1% stake (based on common stock) in Lotte Corporation004990, and Lotte Holdings holds a 2.5% stake. This is enough to compete with Chairman Shin Dong-bin's 13.0% stake in Lotte Corporation.
Kojunsha, the largest shareholder of Lotte Holdings, holds approximately 28.1% of the shares. Chairman Shin Dong-joo serves as the representative of Kojunsha, effectively acting as the largest shareholder of Lotte Holdings. Personally, he also holds 1.8% of Lotte Holdings. Nevertheless, he continues to lose at Lotte Holdings shareholder meetings because the Lotte Holdings Employee Shareholding Association and the Executive Shareholding Association, which hold 27.8% and 5.9% respectively, support Chairman Shin Dong-bin. To return to management, Chairman Shin Dong-joo must succeed in persuading Lotte Holdings' employees.
Winning this damages suit would not grant Chairman Shin Dong-joo control over Lotte Group. However, a win could provide him with the justification to persuade Lotte Holdings' employees. In fact, he has been questioning his brother's moral standing for years. The business community views this as an attempt to highlight Shin Dong-bin's moral flaws to win over the employees.
There is no guarantee that a victory would lead to employee support, as Lotte Holdings' performance has been improving under Chairman Shin Dong-bin's leadership. According to Hotel Lotte’s business report, Lotte Holdings' revenue grew by 30.91% from 75.5 billion KRW in 2023 to 98.9 billion KRW in 2024, and operating profit increased by 174.10% from 27.1 billion KRW to 74.2 billion KRW during the same period.
Chairman Shin Dong-joo claims that this lawsuit is for the ethics of Lotte Group, not for his return to management. "This lawsuit is not just a legal procedure, but an official response by the largest shareholder to set right the ethics and governance of Lotte Group," he stated. "I will fulfill my responsibility to the end to ensure that Lotte can be reborn as a company trusted by the people, inheriting the spirit of the late founder, General Chairman Shin Kyuk-ho."
Nevertheless, the public view of Chairman Shin Dong-joo remains cold, as he is not entirely free from his own moral controversies. After his dismissal from Lotte Group, he filed lawsuits in Japanese courts, which ruled that his dismissal was justified. At the time, the Japanese court even used terms stating that he was unfit as a manager and lacked a sense of compliance.
Furthermore, disclosures during those legal proceedings revealed that he had pushed forward with the 'Pulika' business, which was based on the use of illegally and unauthorizedly collected footage, and had obtained employee emails through dishonest means. Because of this, the sentiment in the business world is generally more favorable toward Chairman Shin Dong-bin than toward Shin Dong-joo.
A business industry source commented, "Chairman Shin Dong-joo has already cashed out approximately 1.4 trillion KRW by selling all his shares in Lotte Group's Korean entities, so he has no standing to criticize Lotte Group’s management. He should stop these obstructionist actions that provide no help to corporate management during these challenging economic times." Lotte Group has not issued an official statement regarding this matter.