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POSCO slush fund probe widening
Ex-POSCO E&C vice chairman questioned
By Lee Kyung-min
Chung Dong-hwa
By Lee Kyung-min
Prosecutors questioned former POSCO E&C Vice Chairman Chung Dong-hwa, Tuesday, over allegations that he played a central role in creating a slush fund while he served in the post from 2009 to 2012.
He is also suspected of accepting bribes from the firm’s subcontractors and business partners.
His summons came about two months after the prosecution launched an investigation into the “failed energy diplomacy” conducted during the Lee Myung-bak administration.
Chung allegedly masterminded the creation of a 10 billion won ($9 million) slush fund while leading the firm’s overseas construction projects.
Prosecutors believe behind Chung was former POSCO Chairman Chung Joon-yang, who maintained close relations with Lee’s aides. The former chairman is also likely to be summoned soon.
The prosecution said it will determine whether to seek a detention warrant for Chung Dong-hwa.
Five former and incumbent POSCO E&C officials have been indicted for their alleged roles in creating and managing the slush fund. The officials worked in the firm’s construction and engineering departments.
Of the five, one surnamed Park, 52, who headed the firm’s Vietnamese unit from 2009 to 2011, was put on trial for embezzling 4 billion won ($3.5 million) from the fund.
Another surnamed Park, 55, was indicted for taking millions of won in kickbacks from subcontractors while heading a construction deal in Gumi in 2012.
Another executive, surnamed Lee, was accused of taking 400 million won in kickbacks from two subcontractors while participating in the Saemangeum reclamation project in 2012 to 2013.
Former POSCO E&C Vice Chairman Kim Ik-hee is also being investigated without physical detention for bribery allegations.
The prosecution also has also sought detention warrants for two other executives at POSCO E&C, whose identities were not disclosed, on suspicions that they pocketed 1.7 billion won and 1.1 billion won respectively.
The construction firm’s subcontractors involved in corrupt deals have also been indicted, including two executives of Heungwoo Industrial and a chairman of a consulting firm surnamed Jang.
Heungwoo Industrial CEO Lee Cheol-seung was also questioned early this month over allegations that he helped POCSO create a separate 4 billion won ($3.7 million) slush fund.
POSCO is also under investigation for allegedly creating a slush fund through its subcontractors and business partners, separately from its construction unit.
The firms include Kosteel and Sehwa MP.
Kosteel Chairman Park Jae-chun has been detained, and Sehwa MP Chairman Jun jung-do is likely to face questioning as early as next week. Jun formerly held the largest stake at Sungjin Geotec, the predecessor of POSCO Plantec.
Jun is suspected of embezzling some 65 billion won of a fund set aside by POSCO Plantec for Iranian oil plant construction in 2012 and 2013.