Lotte Founder on Trial

LOTTE FOUNDER ON TRIAL

Is this the beginning of an attack of the ‘Chaebols’?

On March 21st 2017, the founder of the conglomerate Lotte, Shin Kyuk-Ho was summoned to court to investigate his role in another scandal that has captured the nation.

The founder of the Lotte group, one of South Korea’s largest Chaebols' is under investigation on multiple allegations ranging from the possible embezzlement of over 250 billion USD to the possible breach in information between trustees and shareholders.

His son’s Shin Dong- Joo and Shin Dong- bin are also under trial for embezzlement and his daughter Shin Young- Ja is currently serving a three-year jail sentence for embezzlement.

What is a Chaebol?

The Chaebol system is an economic conglomerate structure that was started in South Korea around the 1960s, creating multinationals with massive global operations. The word "chaebol" means "business family" or "monopoly" in Korean. The chaebol structure can contain single large company or several groups of companies. Each chaebol is owned, controlled or managed by the same family dynasty, generally that of the group's founder. Samsung, Hyundai and LG Group are among the biggest and most prominent chaebol.

What is really going on underneath the trial?

There are two underlying factors underneath the surface of the trial. First is the feud between Shin Kyuk-Ho’s two oldest sons. They are currently embroiled in a conflict as to who will take over the company after their father relinquishes control. They are both adamant that they are the right people for the job. Shin Dong Joo was considered the heir apparent but was ousted by his more lucrative brother who saw the company grow under his leadership. The failed coup last year by João and the ill sentiment for all the public to see was one of the driving factors for the trial. The other brother Shin Dong-bin has been accused of tax evasion and siphoning of money to his own personal stash.

This is could be due to the Anti- Chaebol sentiment present in South Korea during times of strife. During the economic crisis of 1997, South Korean’s similarly went after the Chaebol’s to vent their political frustration. Currently due to the North Korean missile threat and the impeachment of Park Geun-Hye, the nation might be scapegoating by going after the Chaebol’s of Samsung and Lotte.

Assessment

Lotte is going through a crisis, China has shut down all their factories and outlets due them allowing THAAD to deploy on their land and they could be looking for a new leader if they family is indicted. But this marks a time of upheaval in the nation, that needs stability on all fronts. Lotte’s heir apparent is still up in the air and so is the future of the nation itself.