Asian retail and chewing gum giant Lotte has accepted the resignation of its co-CEO after he was convicted of bribery and embezzlement in a wide-ranging corruption scandal that brought down South Korea's president.
The company said Wednesday that Shin Dong-bin has left his CEO post at Lotte Holdings but will remain on its board as vice chairman. Shin, a son of Lotte's founder, was convicted and imprisoned earlier this month
His Japanese co-CEO, Takayuki Tsukuda, will head the holding company at the heart of Lotte's complicated ownership structure, Lotte Holdings said in an emailed statement.
Japan typically adopts a tough stance toward convicted executives, who are usually sacked from chief executive positions when indicted by authorities.
Lotte Holdings in Japan controls Hotel Lotte, which controls Lotte's various South Korean businesses. Shin's resignation will inevitably weaken ties between Lotte's businesses in South Korea and in Japan, the company said.
Before he was convicted and given a two-and-a-half year jail term earlier this month, Shin had sought to improve transparency and reform South Korea's fifth-largest conglomerate. Founded by his father in Japan, Lotte is well-known across Asia with a sprawling business that encompasses retailing, confectionery, chemicals, hotels and entertainment.
Shin's imprisonment came as a shock to the Korean business community and to Lotte itself. Just a week before a Seoul district court ordered him to be jailed, a Seoul appeals court released another business tycoon involved in the same scandal: Samsung Vice Chair Lee Jae-yong. He had spent nearly a year in prison on bribery and other charges but won a suspended sentence on appeal.
Lee's release fueled a public outcry and anger toward the perceived soft treatment of business elites by South Korea's judiciary system. Many in Seoul had expected Shin would also avoid imprisonment because he appeared to be less deeply implicated in the case.
Shin's imprisonment has left Lotte bereft of leadership at a time when it is facing various challenges. The company was looking to sell its retail businesses in China after a diplomatic tussle between China and South Korea over a U.S. missile defense system that battered Lotte's businesses there. Shin had been solidifying his control over Lotte after a bruising public feud with his older brother who had also sought to take control.