South Korea’s fifth largest conglomerate Lotte Group made sweeping changes in its organization and executives during its regular management reshuffle as it had promised to do last year following high-profile family feud.

The group is also implicated in the influence-peddling scandal and faces harsh actions from China for its decision to hand over its golf course site for a Terminal High Altitude Area Defense (THAAD) battery.

Lotte Group held a board meeting of its nine chemical and food units on Tuesday to conduct the organizational reshuffle. It overhauled its policy headquarters, top decision-making body for the group, and newly set up a compliance management unit as its Chairman Shin Dong-bin had pledged in October as part of efforts to recreate the group image and restore public confidence after a succession feud between Chairman Shin and his elder brother, who are sons of the group founder Shin Kyuk-ho.

Starting March, the policy headquarters that had seven departments, 17 teams and 200 staff will be divided into two separate teams of a management innovation unit and a compliance committee. The management innovation unit to be led by Hwang Kak-gyu will be streamlined to four teams. An unnamed official from the group said Hwang has ascended to the group’s No.2 replacing its late Vice Chairman Lee In-won.

The new compliance committee will oversee whether the group’s affiliates follow internal rules and procedures to ensure full compliance with the law.

The group’s former external relations head So Jin-se is expected to lead a social contribution team to focus on enhancing Lotte’s brand image. He will also reportedly play a role as a chief advisor for Shin.

Lotte has also regrouped its affiliates into four business units (BU) to facilitate its long-term plan to introduce a holding company system. The chemical unit will be led by Lotte Chemical President Huh Soo-young and food unit by Lotte Chilsung Beverage President Lee Jae-hyuk. Although it is not formally confirmed yet, Lotte Department Store CEO Lee Won-joon would head the retail unit and Hotel Lotte CEO Song Yong-dok would take the helm of the hotel and service unit, according to sources.

An official from the group said that the management is replaced by younger people to freshen up and reinvigorate the group facing a number of challenges. The group is under investigation by the country’s independent counsel team over its possible involvement in the power abuse scandal of President Park Geun-hye who faces impeachment trial for granting use of presidential influence to her friend Choi Soon-sil and demanding corporate donations in return for favors.

The group has also met by a series of hostile actions from the Chinese government after a premise under its ownership has become a location to host the U.S. antimissile system THAAD.

Malaysia’s Lotte Chemical Titan CEO Kim Gyo-hyun will be named Lotte Chemical CEO by replacing Huh. Lotte Chemical Vice President Lee Hong-ryeol will head Lotte Fine Chemical Co.

The group is expected to promote vice president Kang Hee-tae to Lotte Department Store CEO, vice president Kim Jung-hwan to Hotel Lotte CEO, Park Hyun-cheol to Lotte Corp. CEO and Ha Seok-joo to Lotte E&C CEO at a board meeting scheduled on Wednesday and Thursday.

By Son Il-seon and Kim Yoo-tae

[ⓒ Pulse by Maeil Business News Korea & mk.co.kr, All rights reserved]