Lotte Group Chairman Shin Dong-bin (Photos: Lotte Group)

Lotte Group Chairman Shin Dong-bin pleaded not guilty to charges involving giving bribes to former president Park Geun-hye in return for obtaining a business license for a duty-free shop in an appellate court trial at the Seoul High Court on Aug. 17.

Chairman Shin himself also complained of not devoting himself to his role as chairman of Lotte Group, the nation’s fifth largest conglomerate, for as much as six months, particularly not finalizing plans on hiring freshmen employees and new investments.

Chairman Shin made the comments in advance of the pending sentencing, slated for Aug. 29. He maintained that his group’s support for the K-Sports Foundation came at the urging of former president Park, and it was a kind of social contribution activity, not bribe-giving. His arrest on bribery charges in return for obtaining the duty-free shop license of Lotte World Tower was out of the question, he maintained.

Lotte Experiences Hard Times Implementing Investments and New Projects in Absence of Shin.
Lotte Group saw investments plunge 20.5 percent during the first half this year.

Lotte placed last among the top 30 conglomerates in terms of investments. Lotte Group was the sole group whose investment declined among the top five conglomerates. Figures released by the website CEO Score on corporate management performances showed that 16 subsidiaries of Lotte Group invested a combined 1.11 trillion won during the first six months in 2017, but their investments dropped to 879.1 billion won in the first half this year.

Top 30 conglomerates poured a combined 45.6 trillion won during the January-September period this year, a 24.2 percent jump over the same period last year. Samsung, SK and LG saw investments jump 22.7 percent, 55.3 percent and 48.1 percent, but only Lotte’s investment was sluggish.

Lotte Group also did not pursue any M&As in Korea and abroad. The group finds it hard to push for the implementation of massive investments and new projects in the absence of Chairman Shin.

Lotte Holdings Vice Chairman Hwang Gak-kyu and heads of the group’s four business units –distribution, chemical, foods and services – are in an emergency management mode, but are defending the status quo. Lotte’s investments, which amounted to 7.5 trillion won in 2010, peaked to 10.4 trillion won in 2016, but plunged to 7 trillion won 7 trillion won n 2017 and this year, further dropping to less than half of last year’s.

A half year has passed after Lotte Chemical’s project to build a massive petrochemical complex in Indonesia was put on hold. Lotte’s strategy to solidify its market leadership in the Southeast Asian market by building a petrochemical complex, including a naphtha cracking center, is in a danger of miscarrying, a Lotte Group executive said. His group’s nurturing one of its growth engines is felt like crumbling, he added.

The project is the largest in scale Lotte Group had been implementing abroad. It surpasses a multfi-purpose shopping mall complex project worth 3 trillion in Shenyang, China, which was cancelled, and the Eco-Smart City Project worth 2 trillion won, being implemented in Hoh Chi Minh City, Vietnam. Last Year, Lotte Chemcial acquired a 500,000 sq. meter site near Titan’s plant in Indonesia from Krakatau Steel and went so far as to build groundwork for the project, including basic design, until Chairman Shin’s arrest.

A view of the Lotte World Tower in Jamsil.