Lotte Group chairman Shin Dong-bin said Wednesday that he would push for an initial public offering of Hotel Lotte by the end of the year, despite the widening probe by prosecutors into his 90 trillion won ($76.7 billion) empire over alleged creation of slush funds and lobbying.

Offering his first apology for causing public concerns, the chairman denied rumors that the listing of Hotel Lotte will be put off indefinitely, stressing that the plan is a pledge he made to the people.

“I really feel sorry for causing concerns over domestic issues. I feel responsible and have been telling all (Lotte) companies to cooperate with (the prosecution’s) investigation,” he told reporters at the groundbreaking ceremony for a joint venture chemical plant in Lake Charles, Louisiana in the U.S.

“(We are) not postponing (Hotel Lotte’s IPO) but will put efforts to (list the company) by the end of the year. I will make sure that it goes public because it is a promise made to the people at the National Assembly,” he said.

The listing of Lotte’s hotel and duty-free business unit is the centerpiece of the chairman’s reform measures that he initiated last year. Shin was facing heated public criticism and political pressure over the retail giant’s shady governance structure that was laid bare during an ugly fight between him and his elder brother. Shin, the younger son of Lotte founder Shin Kyuk-ho also vowed to improve transparency in corporate governance and separate the owner family’s influence over management.

Lotte, however, withdrew its plan to list Hotel Lotte on Monday, three days after the prosecution raided key offices within the group and its affiliates as well as the residences of top executives, including the chairman. The Seoul Central Prosecutors’ Office in charge of the case combed 15 more Lotte affiliates again Tuesday, reflecting the intensity of the probe.

Expressing his confidence, the chairman also said that he is not at all concerned about the ongoing battle with his elder brother. Rumors have been spreading that his brother Shin Dong-joo is stepping up efforts to oust the current chairman by holding him responsible for the recent crisis. The chairman said he will stay in U.S. for a few weeks and return home after a shareholders meeting of Lotte Holdings in Japan set for later this month.

Asked about the impact of the prosecution’s large-scale investigation on Lotte’s business operations including mergers and acquisitions and duty-free store expansions, Shin said it has impacted the company “a bit,” and added, “I wish that the probe ends shortly.”

Despite Shin’s wishes, investigators are widening the probe. Some have suggested that the chairman and his father are being targeted, as well as former government officials suspected of offering preferential treatment in exchange for business favors.

Investigators have found evidence of suspicious capital flow at key affiliates including Lotte Chemical and Lotte E&C.

They are also tracking down the source of slush funds based on circumstantial evidence that executives at Lotte’s policy coordination division, regarded as the group’s core office, may have managed the secret funds and kept them under hundreds of borrowed-name bank accounts.

By questioning three executives in charge of chairman Shin Dong-bin’s asset management, the prosecution has secured evidence that Lotte’s control tower may have been forcing its affiliates to pursue M&A and illegal transfer of assets between other units.

Prosecutors also secured testimony from officials that Lotte founder Shin Kyun-ho and his younger son, the current chief, had received more than 30 billion won annually from companies affiliated with the conglomerates. Most Lotte affiliates remain unlisted in the markets.

The prosecution also found the contents of the founder’s personal safe at the home of one of his former secretary’s relatives. But they have not found any records indicating possible lobbying attempts.

By Cho Chung-un (christory@heraldcorp.com)