South Korea’s Lotte Group has been given time of relief after the Seoul Central District Court on Thursday dismissed the prosecution’s request for the pretrial arrest of its chairman Shin Dong-bin on charges of embezzlement and breach of trust, allowing the conglomerate to avoid the worst-case scenario of a leadership vacuum. Lotte Group plans to use the grace period to make up for the poor publicity after it came under large-scale prosecutorial investigation.

“I believe that our group has many shortfalls, and I would like to take responsibility and make up for them,” Shin told reporters in front of the Seoul Central District Court after the ruling on Thursday. “I will strive to make (Lotte) a better company.”

Shin is expected to come up with reform plans and social contribution offers next month in hopes to restore reputation of the group and founding family name.

He could first target the governance structure that entirely revolves around the family members. The offspring of group founder Shin Kyuk-ho as well as his common-law wife and daughter came under prosecution probe for questionable amassment of wealth and tax evasion.

Lotte Group’s management overhaul will also include enhancing transparency. The conglomerate plans to resume initial public offering of Hotel Lotte Co. that has been indefinitely put off in June due to prosecutorial probe. The IPO, which aims to convert Hotel Lotte into a holding company to improve overall corporate governance and transparency, has been the top priority for Chairman Shin to push forward in the wake of a boisterous sibling feud with his older brother Dong-joo over management control last year. The plan, however, was put on hold after the prosecution’s probe.

Lotte Group also plans to implement commitments already pledged by Shin to improve corporate governance, which include adding more outside directors and strengthening the board. The group’s policy division that had mainly been in charge of integrating group units and handling general matters will instead explore new business projects and spearhead social corporate responsibility activities.

Lotte Group is also expected to resume investment on overseas projects that had been affected by the prosecution’s investigation. The conglomerate that spent about 7 trillion won ($6.3 billion) every year on new investments including merger and acquisitions and facility investment halted because of the prosecution probe since June. Shin was prohibited from leaving the country because of the probe and could not attend Japan-based Lotte Holdings’ board of directors meeting in July and August.

By Cho Sung-ho

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