By Chung Ah-young
Prosecutors have indicted Chung Joon-yang, the former chairman of POSCO Group, along with 31 others involved in an alleged corruption scandal.
The Seoul Central District Prosecutors’ Office announced Wednesday the result of its eight-month investigation of the steelmaker since it first raided the headquarters of the group in March.
The prosecution has been looking into suspicious deals and an alleged slush fund created when Chung headed the company from 2009 to 2014.
“It took a lot of time to investigate the nation’s largest steelmaker and its numerous subcontractors,” a prosecutor said.
Prosecutors also indicted former lawmaker Lee Sang-deuk, the brother of former President Lee Myung-bak.
Chung was accused of allegedly causing a 159.2 billion won ($137 million) loss to POSCO by taking over Sungjin Geotec, the predecessor of POSCO Plantec, in 2010, buying it for significantly more than the market price.
Chung also allegedly offered 1.2 billion won in a bribe to an owner of TM Tech, a Pohang-based steel mill facility management firm, owned by a close friend of Lee, by placing orders with the company. He allegedly did so in return for Lee’s influence peddling to get approval for POSCO to build a new steel mill in Pohang in 2009.
Lee was indicted for taking illegal political funds from POSCO.
Investigators also found that former POSCO Engineering and Construction (E&C) Vice Chairman Chung Dong-hwa allegedly helped the friend of a high-ranking government official work as a senior officer at the company in 2011. In return, the vice chairman won the highest honor for industry development from the government in 2012.
The former vice chairman is suspected of embezzling some 5 billion won from 2009 to 2013. He also allegedly had a subcontractor give 185 million won to his brother-in-law in return for placing an order for road construction in Vietnam to the company.
Fifteen other former and sitting POSCO executives, heads of 13 subcontractors and a vice president of Korea Development Bank were also indicted on charges of bribery and breach of trust.
They included a relative of Chung who allegedly made more than 470 million won while working as an advisor for Kosteel, which buys steel slabs from POSCO to make wire rods.
Bae Sung-ro, former chairman of Dongyang Construction, was indicted for allegedly committing an accounting fraud of 90 billion won and winning the bid for construction orders worth 87.5 billion won from POSCO. He was also charged with embezzling 4.1 billion won from the company’s Indonesia unit and causing 8.3 billion won in losses to the company through stock transactions between the affiliates from 2012 to 2014.