[The Editors' Verdict] "Orderly Resignation" Means Only President Yoon's Voluntary Departure

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Recently, Lotte Group, which has been embroiled in rumors of a 'liquidity crisis,' has a deep history of unfortunate ties with the impeachment of a sitting president. Lotte faced its greatest crisis since its founding when it became involved in the Choi Soon-sil political scandal that triggered the impeachment of former President Park Geun-hye in 2016, following a management dispute between the second-generation owner brothers in 2015. At that time, Lotte Chairman Shin Dong-bin was prosecuted alongside former President Park for bribery after donating 7 billion won to the K-Sports Foundation led by Choi, and he served over 200 days in prison after being found guilty.

Coincidentally, Lotte is again staggering amid crisis rumors at the heart of the impeachment turmoil triggered by President Yoon Suk-yeol's declaration of martial law on the 3rd. The rumor started as a 'liquidity crisis causing Lotte to disintegrate,' but the essence lies in the group's business structure, which fails to generate cash. Lotte, which began its domestic business with 'Lotte Gum,' grew into the fifth-largest distribution conglomerate in Korea, operating department stores, duty-free shops, and hotels. However, during the period when consumption shifted to online and Chairman Shin was imprisoned, the 3 trillion won investment plan for the e-commerce market was abandoned. Meanwhile, Coupang completed its delivery chain through large-scale investments in logistics centers and grew into the largest distribution company in Korea by sales.

Even after Chairman Shin was released in 2017, Lotte hesitated for some time to find a new cash cow for the group. It was only from 2022 that Lotte designated bio, new materials, and renewable energy as new businesses and embarked on large-scale investments. This was a continuation of conservative management following the impeachment of former President Park. As a result, recently, Lotte has been putting its symbol, the Jamsil Lotte World Tower, up as collateral and selling off prime affiliates to secure liquidity at all costs. Although the crisis rumors began in the chemical and construction sectors, which suffered from sluggish business conditions and deteriorating performance, the crisis is spreading because the group's cash-generating ability has fallen to the point where it is difficult to cover interest payments immediately.

Lotte is not the only company caught up in crisis rumors this year. Even Samsung, the largest conglomerate in Korea, continues to face crisis rumors due to poor semiconductor performance. The Korean economy is facing an unprecedented economic downturn this year. In particular, consumption, which has been depressed due to prolonged high exchange rates and high interest rates, shows no signs of recovery. Exports to the U.S. and China, the main pillars of growth, are declining, and the tariff risks feared after the inauguration of the Trump administration next year are already hindering corporate investment.

At this juncture, President Yoon's declaration of martial law has brought a snowstorm to the frozen economy. In the three days following the martial law incident last week, foreign investors withdrew 10 trillion won from the stock market. The video of armed martial law troops blocking the National Assembly shocked not only Korea but the entire world.

The problem is that the impeachment vote against President Yoon on the 7th was blocked, indicating signs of a prolonged impeachment crisis. Han Dong-hoon, leader of the ruling People Power Party who led the failure of the impeachment vote, advocates a 'orderly resignation' including President Yoon stepping down from his second term and plans to operate the government under Acting Prime Minister Han Duck-soo. However, since the president is not incapacitated, the prime minister acting as president violates the Constitution (Articles 68 and 71), so the opposition party will not accept this. The Democratic Party has announced it will reintroduce the impeachment motion against President Yoon and proceed with its handling on the 12th. Furthermore, the Democratic Party is prepared to attempt weekly votes until the impeachment motion passes the National Assembly.

During the Choi Soon-sil political scandal, former President Park was removed from office three months after the National Assembly passed the impeachment motion (suspending presidential duties) and the Constitutional Court's impeachment trial. This time, if the ruling People Power Party continues to boycott the vote, the process will take much longer. If the impeachment crisis prolongs, the recent crisis rumors surrounding major companies could become a real crisis. On the 7th, President Yoon entrusted the ruling party with state affairs, including his term. The 'orderly resignation' that the ruling party can achieve is to have the president voluntarily step down.

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