Tuesday, September 27, 2016

Chairman of Lotte going to be arrested

Korean prosecutors intend to arrest Lotte group chairman. They asked permission of arrest for the court on Sep 26th, 2016.

Reuters: South Korea prosecutors seek arrest warrant for Lotte Group chairman

The prosecutors suspect Shin Dong-bin, the Lotte Chairman, had conducted embezzlement of the profit and malpractice in the management of the group companies. Lotte's spokesman admitted the fact and said that Don-bin was willing to cooperate with the police.

Lotte was founded in 1948 originally in Japan, because Shin Kyuk-ho, the founder of Lotte, was residing in Japan. After that, Kyuk-ho developed Lotte also in South Korea in 1966. Lotte was originally a sweets providing company. But it grew rapidly, to gain many other companies such as hotels and professional baseball teams. Nowadays, there are no Japanese who have not heard the name "Lotte." And many Japanese do not know that the founder is a Korean.

Shin Dong-bin succeeded the seat of the chairman of Korean Lotte in 2011. He acted as the owner of Lotte in Japan professional baseball, and he let Lotte become the champion of the Pacific League in 2010.

His elder brother, Shin Dong-joo, assume the president of Lotte Japan in 2011. However, he was dismissed by his father, Shin Kyuk-ho. It seemed that Shin Dong-bin succeed the whole group. But, the relationship between Dong-bin and Kyuk-ho was deteriorated. Last year, Kyuk-ho, cooperating with Dong-joo, attempted to exile Dong-bin. But his will was not accepted by the board of directors. Kyuk-ho was finally forced to leave the administration of Lotte group.

It occurred only one year ago. I am not sure this conflict is somewhat relevant to the movement of prosecutors. They seem willing to arrest not only Don-bin, but also Kyok-ho and Don-joo. It is unlikely one of these persons made an intrigue.

BBC: Prosecution seeks arrest of Lotte chairman in bribery probe

By the way, actions of a person at an influential position of a company are often arbitrally interpreted by the authority. For example, a president decides a big deal, such as a hostile takeover, to lead a large amount of loss. Then, some stakeholders will suspect that the president intended to make a loss to reward the counterpart secretly, against stockholders' interest. Therefore, we should be cautious to treat such news.

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