By Jung Min-ho
Prosecutors are investigating a group of politicians and former government officials who allegedly peddled their influence to give favors to POSCO, Dongguk Streel and other firms, under the Lee Myung-bak administration, sources said Monday.
The suspects include some aides of former President Lee, the sources said, without disclosing their names.
Prosecutors suspect executives of POSCO Engineering and Construction (E&C) bribed politicians through a consulting firm’s owner, surnamed Jang, by creating a slush fund.
Jang has been questioned on charges of embezzling some of the slush fund.
Sources from the prosecution said that Jang has a criminal record of illegally giving 1.5 billion won ($1.3 million) to Seo Jung-woo, a former legal advisor to then-president candidate Lee Hoi-chang, on behalf of Daewoo E&C in 2002.
Prosecutors already arrested POSCO E&C’s executive, surnamed Park, who headed the company’s Vietnamese unit from 2009 to 2011, for allegedly pocketing 4 billion won of the slush fund, estimated at 10 billion won.
After finding that Jang connived with Park on embezzling the money, prosecutors requested an arrest warrant against Jang on Friday.
Prosecutors did not mention the names of politicians on their list. But the close relationship between some POSCO executives and key figures in the Lee administration indicates that the former president’s key aides might be at the end of the money trail.
As part of their investigation, prosecutors are expected to summon former POSCO E&C Vice Chairman Chung Dong-hwa for questioning this week.
When the slush fund was created, Chung was vice president at the steelmaker’s construction subsidiary.
Prosecutors suspect Chung was aware of the slush fund because it is unlikely that Park could handle such a large amount of money alone. They suspect Chung ordered Park to do so, or at least conspired in the act.
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.
Meanwhile, other companies have emerged as targets of the prosecutors’ large-scale probe.
Dongkuk Steel is suspected of stashing about 10 billion won in illegal funds in U.S. accounts while in the process of purchasing raw materials and avoiding paying taxes.
After raiding the firm’s headquarters in central Seoul on Saturday, investigators reportedly raided offices of its subcontractors as well.
Dongkuk is also under suspicion of fabricating the amount of goods it imported from Russia and Japan, and inflating the cost of building a power plant.
Prosecutors said they will soon summon the company’s CEO, Chang Sae-joo, and employees in charge of finance and accounting for questioning.
Construction firm Keangnam Enterprises, state-run Korea National Oil Corp. and petrochemicals company SK Innovation are also facing allegations that they created slush funds when they participated in state projects under the Lee administration.