Prosecutors raided the head offices of a Seoul builder and the state-run oil company Wednesday to investigate their alleged irregularities involving a botched investment in a Russian oil exploration project during the previous administration.
The Seoul Central District Prosecutors’ Office said investigators swooped down on financially troubled Keangnam Enterprises Ltd. in eastern Seoul and the state-run Korea National Oil Corp. in Ulsan, 414 kilometers southeast of Seoul, to confiscate evidence related to the suspicions.
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| Reporters stand outside the Seoul headquarters of Keangnam Enterprises Ltd. (Yonhap) |
The two companies allegedly squandered 300 billion won ($266 million) in an oil exploration project in Kamchatka in Russia’s Far East between 2005 and 2009.
The investment was part of then-President Lee Myung-bak’s controversial push for overseas resource projects, which critics say have resulted in wasted taxpayer money with few tangible results.
Prosecutors said they found a promising lead that suggests KNOC and Keangnam Enterprises used illegal means to win the state’s approval to invest, despite concerns that the project lacked economic viability.
Investigators believe these companies may have exaggerated the profits they expected from the investment when pitching the idea to South Korea’s financial regulator. There is also a possibility that these firms embezzled some of the investment money, they said.
After disappointing results, KNOC and a consortium of South Korean companies pulled out of the Russian business in 2010.
Prosecutors are likely to widen their investigation into other energy diplomacy-related projects pursued during the Lee administration.
They are also looking into suspicions of irregularities in Keangnam Enterprises’ sale of a stake in a nickel operation in Madagascar to the Korea Resources Corp. in 2010. The state-run firm allegedly bought the stake for an above-market value.
The prosecution probe comes after the incumbent Park Geun-hye administration declared an all-out war on corruption.
Presiding over a Cabinet meeting Tuesday, Park called for stern measures to root out endemic corruption across society, saying economic progress could be undone unless South Korea addresses corruption and ill practices. (Yonhap)
