(LEAD) Lotte's Japan units bag hefty dividend from Korean firms

(ATTN: CHANGES headline and lead; UPDATES throughout with three-year data)

SEOUL, Aug. 5 (Yonhap) -- Lotte's Japanese units took home a sizable amount of dividend payouts from companies in South Korea, data showed Wednesday, amid a growing debate over the company's nationality spurred by a bitter succession feud.

Lotte, the country's fifth-largest conglomerate, is embroiled in an ownership dispute involving founder Shin Kyuk-ho, 93, and his two sons, Dong-ju and Dong-bin, who had each controlled the company's operations in Japan and Korea until early this year. While Dong-ju was ousted from key positions at Japanese units, Dong-bin took the helm at Japan-based Lotte Holdings, the group's holding firm.

The seemingly smooth power transition took a nasty twist late last month when Kyuk-ho and Dong-ju tried to dethrone Dong-bin from Lotte Holdings. In turn, Dong-bin demoted his father from general chairman of Lotte Holdings to honorary chairman, claiming that his age has weakened his mental and physical capacity.

The family feud took another unexpected course, when an interview with Kyuk-ho and Dong-ju was broadcast, showing them speaking only in Japanese and using their Japanese names. This unsettled local consumers who had believed Lotte was solely a Korean company with distant roots in Japan. The company was first established there and then later expanded into South Korea.

Lotte's 16 Japan units, including the group's holding firm Lotte Holdings, bagged 139.8 billion won (US$119.3 million) in dividend payouts from Korean firms between 2012 and 2014, according to the data by market tracker Chaebul.com.

More than half of the amount accounted for the dividend payment by Hotel Lotte, in which the Japanese units hold a combined 99.28 percent share.

By company, Lotte Holdings took home 31 billion won worth of dividend payouts. The company holds a 19.07 percent stake in Hotel Lotte and a 9.3 percent stake in Lotte Chemical.

Kwangyunsa, the company believed to be at the apex of Lotte's cross-shareholding structure stretching between South Korea and Japan, received 13.2 billion won in dividends from Busan Lotte Hotel, Hotel Lotte, Lotte Capital, Busan Bank and BNK Financial Group.

Busan Bank and BNK Financial Group are not affiliates of Lotte.

Separate data by the company and the financial watchdog showed that roughly 10 percent of the 300 billion won dividend payments doled out by Lotte's Korea-based companies in 2014 were passed on to its Japan-based affiliates through Lotte Holdings and unidentified units assumed to be the group's investment arms.

An official at Lotte Group, headquartered in Seoul, said the paid amount is relatively small compared to the total amount, refuting claims that corporate profit is shuttled to Japan.

"The 34 billion won dividend payout to Japanese affiliates is small compared with Lotte Group's 84 trillion won sales and 300 billion won dividend payout. Most of the profit by Lotte Group is dispersed to Korean shareholders."

Lotte was first established as a confectionery in postwar Japan in 1948. It later expanded into Korea when diplomatic ties between Japan and Korea were normalized following Japan's colonial ruling between 1910 and 1945.

Founder Kyuk-ho was born in the South Korean port city of Ulsan, 414 kilometers south of Seoul, while his sons were born and raised in Japan by a Japanese mother.

mil@yna.co.kr
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