Anti-lotte Sentiment Boiling Over

The escalating family mudslinging at Lotte Group is triggering a public uproar as consumers are exasperated by the "foul infighting" over control of the country's fifth-largest conglomerate.

Lotte Group's opaque corporate governance structure and its founder Shin Kyuk-ho's emperor-like management style have aggravated the public sentiment toward the business empire.

In addition, the group's ownership structure • in which a holding firm based in Japan controls all of its Korean units • has made things go from bad to worse as anti-Japanese sentiment runs high here ahead of the 70th anniversary of the nation's liberation from colonial rule on Aug. 15.

Consumer groups have begun launching a boycott campaign against Lotte, while investors have shunned buying shares of group units listed on the local bourse.

The National Tax Service is also conducting an audit of Daehong Communications, a public relations unit of the Lotte Group.

Several civic groups are also demanding that the tax agency and the Fair Trade Commission thoroughly inspect the group for possible tax evasion and irregular business practices.

The Financial Consumer Agency (FCA), one of Korea's largest consumer advocacy groups, said Tuesday that it will stage an all-out boycott of all Lotte Group affiliates. Other consumer groups are expected to follow suit as the ongoing Lotte family row will likely drag on for quite some time.

The boycott is expected to hit the retail and manufacturing units of Lotte Group.

"The recent family feud at Lotte Group shows that family controlled conglomerates have no interest in fulfilling their corporate social responsibility," the FCA said. "We will stage a nationwide boycott of Lotte Card, Lotte Nonlife Insurance, Lotte Department Store and other group affiliates."

The agency urged consumers not to buy products sold or made by Lotte companies, stressing that law enforcement authorities should investigate the group to check if it has committed any illicit acts.

"Korea needs to drastically reform chaebol families because they are at the root of the country's increasing economic inequality and degrade the national image," it said. "Their dubious corporate governance structure and emperor-like management styles cannot be tolerated anymore."

Units back Dong-bin

On Tuesday, the heads of 37 Lotte Group affiliates here issued a joint statement, pledging to support Shin Dong-bin, the youngest son of the Lotte Group...