Koo Kwang-mo, chairman of South Korea’s fourth-largest conglomerate LG, has been sued over the distribution of inherited wealth, including a stake in LG Corp., the flagship unit at the center of the group’s cross-shareholding.
The rare legal dispute over wealth among LG family members, if protracted, could escalate to an all-out war, potentially shaking Koo's management control over the electronics-to-battery conglomerate, analysts said.
Koo’s mother Kim Young-sik and his two sisters, Koo Yeon-kyung and Koo Yeon-soo, last month filed a lawsuit against him with the Seoul Western District Court, seeking redistribution of wealth inherited from the late LG Group Chairman Koo Bon-moo, who died in May 2018.
Koo Kwang-mo was the nephew of the late chairman but was adopted in 2004 after Koo Bon-moo’s only son died in a car accident. Koo Kwang-mo became the conglomerate’s chairman in June 2018.
At that time, Koo Kwang-mo inherited an 8.76% stake in LG Corp., the holding company of the conglomerate, out of 11.28% held by the late chairman. His LG Corp. shareholding has since grown to 15.95%. With the stake, he is the largest shareholder of LG Corp., which controls affiliates including LG Electronics Inc., LG Chem Ltd., LG Display Co., LG Energy Solution Ltd. and LG Innotek Co.
LG Group Chairman Koo Kwang-mo The late chairman’s eldest daughter Koo Yeon-kyung, who is currently the chief executive of LG Welfare Foundation, inherited 2.01% of LG Corp. His second daughter, Koo Yeon-soo, received a 0.51% stake while his wife, Kim Young-sik, didn’t inherit a single share of LG Corp.
The three inherited other personal assets of the late chairman, including financial products, real estate and artwork worth a combined 500 billion won ($379 million).
The late chairman's wife and their two daughters are now seeking a greater share of the LG Corp. stake in line with the relevant law which stipulates the spouse and children split the inherited wealth at a 60:40 ratio, industry sources said.
KOO REFUTES CLAIMS
The legal fight marks the first time a dispute over inherited wealth or management control has occurred among LG family members since the group’s founding in 1947, industry watchers said.
LG Group Chairman Koo is briefed on carbon reduction technology at LG Science Park In response to the lawsuit, LG Corp. said in a statement: “The division of the inherited wealth was agreed upon after months of talks among the related parties at the time. It’s hard to understand why they are raising the issue now, nearly five years after the matter was settled.”
“Any attempt to shake LG's management control, while calling for a redistribution of inherited wealth, cannot be tolerated,” it said.
Attorney Kim Sang-hoon of Trinity Legal, a Seoul-based law firm, said unless there’s proof that the inherited wealth wasn’t properly distributed among the four, it may not be easy for the plaintiffs to win the case.
Shares of LG Corp. finished 6.6% higher at 85,900 won on Friday, outperforming the broader Kospi index’s 1% decline.
Write to Ji-Eun Jeong, Sungsu Bae and Hyun-Ah Oh at Jeong@hankyung.com In-Soo Nam edited this article.
