[THE INVESTOR] Korean prosecutors digging into alleged corruption at  Lotte Group are zeroing in on the group’s chairman Shin Dong-bin, the victor of a bitter family feud over the control of the Korean-Japanese conglomerate. 

The Seoul Central District Prosecutors’ Office questioned Shin Kyuk-ho, the ailing 93-year-old founder of Lotte, twice at his residence in a Seoul hotel last week. It is now mulling ways to summon his third wife, sources at the office said Sunday.

Seo Mi-kyung, a 57-year-old Korean national who has a daughter through extramarital relations with Shin, has been refusing to be questioned by staying in Japan. Investigators suspect she may have played a part in the Shin family’s alleged corruption, embezzlement and slush fund creation at Lotte. They could take steps to cancel her passport, local reports said, citing unnamed sources at the prosecution.

This will make Shin Dong-bin, the founder’s younger son, who last year ousted his older brother to become the group’s chief, as the likely next target of investigators.

Prosecutors have already questioned Shin Dong-joo, the founder’s first son, twice -- for 17 hours earlier this month and for the second time on Saturday. He is said to have admitted to some wrongdoing, including pocketing corporate money by keeping his name on the payroll of several Lotte companies despite doing nothing to get paid.

Some local media suspect that the ongoing probe may be a revenge attack by him on the current chairman.

Although Shin Dong-bin is widely seen as the winner in the fraternal row, with the older brother removed from the company’s management, their war is not over at court.

Last week, Japanese courts resumed the hearing in two of the most-watched cases in the Lotte family feud.

The resumption followed a Seoul court’s finding late last month that the Lotte founder has “limited” mental abilities, dealing a blow to Shin Dong-joo who seeks to retake control of the group from his younger brother.

The mental health of the ailing patriarch was a key issue because he supported the first son, Shin Dong-joo who has been overseeing the group’s Japanese operations, as his legitimate heir.

Shin Dong-bin, who outsmarted Shin Dong-joo by growing his Korean business much bigger than his brother’s, staged a board room coup to eventually crown himself as the sole leader of the entire Lotte. His father was incapable of making such a decision, he argued then.

One of the two cases is regarding a shareholder meeting and a board meeting last year at Kojyunsya, a Tokyo-based company wholly owned by the Shin family. It sits at the top of the group’s complex shareholding structure.

There, the shareholders and directors gave the nod to Shin Dong-joo as the successor of the founder. The senior Shin also gave one stock of Kojyunsya to Shin Dong-joo, making him the company’s largest shareholder by one. Shin Dong-bin is challenging this decision at court.

Kojyunsya is the largest shareholder of the unlisted Lotte Holdings, the holding company of the group’s Japan-based companies, with a 28.1 percent stake.

By Lee Sun-young/ The Korea Herald (milaya@heraldcorp.com)