Prosecutors raided the head office of POSCO Engineering & Construction Co. (POSCO E&C) on Friday, launching an investigation into allegations that the company created massive slush funds overseas.
 |
| (Yonhap) |
Late last month, the construction arm of South Korea’s top steelmaker, POSCO, said two executives and about 10 employees in charge of construction projects in Vietnam were reprimanded in July for operating illegal slush funds worth about 10 billion won ($8.9 million).
The money, which had been accumulated by exaggerating the amount the South Korean company needed to pay local subcontractors in Vietnam, was later given out as monthly rebates to contractors from 2009 to 2012, it said.
The Seoul Central District Prosecutors’ Office said a team of prosecutors and investigators was sent to the main office in Incheon, west of Seoul, to secure documents on overseas construction projects, accounting books and computer hard disks.
Following the move, prosecutors will analyze bank transactions by the company officials involved in the case and obtain audit materials from the company, according to prosecution sources.
Prosecutors also plan to summon the company officials to determine the exact size and use of the slush funds, they said.
The raid came one day after Prime Minister Lee Wan-koo declared a war against corruption in a statement. Lee previously ordered a thorough investigation into the case during a parliamentary interpellation session on Feb. 26.
Some have raised suspicions that the secret funds were actually created by the company or that some of the money was funneled into the country.
Last year, the National Tax Service referred POSCO to the prosecution on charges of inflating sales figures in transactions with its affiliates.
But POSCO E&C denies the allegations, calling it “an individual case of corruption committed by company executives in charge of sales in Vietnam who are obsessed with their performance.” (Yonhap)
