By Kim Rahn
Former POSCO Engineering and Construction (E&C) Vice Chairman Chung Dong-hwa has emerged as a central figure in a slush fund scandal that has put the company's global reputation at risk.
The prosecution is expanding its probe into how the slush fund was created and used amid allegations that former President Lee Myung-bak's key aides are at the end of the money trail.
Chung is believed to hold the key to clarifying these suspicions.
In February 2009, Chung, who was vice president at the construction subsidiary's plant sector, was promoted to president of the firm after his predecessor, Chung Joon-yang, became the group chairman.
He was then promoted to vice chairman in March 2012, leading the company's domestic and overseas projects before stepping down in March last year. Almost all his term overlapped with that of former Chairman Chung.
The slush fund was allegedly created during his reign. Concerning the allegations, prosecutors arrested a former executive, surnamed Park, who headed POSCO E&C's Vietnamese unit, for helping the firm create a 10 billion won slush fund while implementing engineering projects there and pocketing 4 billion won of the money. The company in Vietnam has claimed the 10 billion won was used as kickbacks to local contractors there.
Prosecutors suspect Chung was aware of the slush fund because it is unlikely that Park could redirect such a large amount of money alone. They suspect Chung ordered Park to do so or at least connived in the act.
The prosecution already obtained information that 4 billion won was transferred to Korea, and is investigating what it was spent on. Suspicions are that POSCO offered the money as kickbacks to high-profile policymakers in Korea under the former Lee Myung-bak administration.
Chung also had close ties with key figures in the Lee administration, including former Vice Minister of Knowledge Economy Park Young-june and JN Tech Chairman Lee Dong-jo, who allegedly managed the kickbacks Park received.
It is alleged that those two exercised influence on Chung Joon-yang's appointment to the chairmanship, and Chung Dong-hwa was the middleman linking the two with the former chairman. JN Tech's sales jumped largely after it became a subcontractor to POSCO.
Chung Dong-hwa also faces allegations regarding POSCO's takeover of Sungjin Geotec. In 2010, POSCO Plantec acquired Sungjin Geotec, which was on the verge of bankruptcy, at a much-higher-than market price. When Sungjin Geotec won an oil plant project bid in Indonesia in 2012, Chung had his brother-in-law take part in the project consortium.
As Chung is involved in almost all corruption allegations regarding POSCO, it is inevitable for the prosecution to question him. Prosecutors plan to summon him next week at the latest.
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| Chung Dong-hwa |
The prosecution is expanding its probe into how the slush fund was created and used amid allegations that former President Lee Myung-bak's key aides are at the end of the money trail.
Chung is believed to hold the key to clarifying these suspicions.
In February 2009, Chung, who was vice president at the construction subsidiary's plant sector, was promoted to president of the firm after his predecessor, Chung Joon-yang, became the group chairman.
He was then promoted to vice chairman in March 2012, leading the company's domestic and overseas projects before stepping down in March last year. Almost all his term overlapped with that of former Chairman Chung.
The slush fund was allegedly created during his reign. Concerning the allegations, prosecutors arrested a former executive, surnamed Park, who headed POSCO E&C's Vietnamese unit, for helping the firm create a 10 billion won slush fund while implementing engineering projects there and pocketing 4 billion won of the money. The company in Vietnam has claimed the 10 billion won was used as kickbacks to local contractors there.
Prosecutors suspect Chung was aware of the slush fund because it is unlikely that Park could redirect such a large amount of money alone. They suspect Chung ordered Park to do so or at least connived in the act.
The prosecution already obtained information that 4 billion won was transferred to Korea, and is investigating what it was spent on. Suspicions are that POSCO offered the money as kickbacks to high-profile policymakers in Korea under the former Lee Myung-bak administration.
Chung also had close ties with key figures in the Lee administration, including former Vice Minister of Knowledge Economy Park Young-june and JN Tech Chairman Lee Dong-jo, who allegedly managed the kickbacks Park received.
It is alleged that those two exercised influence on Chung Joon-yang's appointment to the chairmanship, and Chung Dong-hwa was the middleman linking the two with the former chairman. JN Tech's sales jumped largely after it became a subcontractor to POSCO.
Chung Dong-hwa also faces allegations regarding POSCO's takeover of Sungjin Geotec. In 2010, POSCO Plantec acquired Sungjin Geotec, which was on the verge of bankruptcy, at a much-higher-than market price. When Sungjin Geotec won an oil plant project bid in Indonesia in 2012, Chung had his brother-in-law take part in the project consortium.
As Chung is involved in almost all corruption allegations regarding POSCO, it is inevitable for the prosecution to question him. Prosecutors plan to summon him next week at the latest.
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