An executive director of POSCO Engineering & Construction Co., the construction arm of POSCO, was detained Tuesday for questioning into his suspected involvement in the company’s creation of a slush fund overseas and bribe-taking from a subcontractor.
Prosecutors detained the executive identified only as Choi as soon as the Seoul Central District Court issued an arrest warrant for him after hours of hearings.
He is the first POSCO E&C executive to have been arrested in connection with the widening slush fund probe involving the world’s third-largest steelmaker, a move which is expected to help speed up the probe.
The POSCO E&C came under a prosecution investigation last month after an internal audit within the company found the existence of the slush fund earlier this year. Prosecutors suspect the construction unit have created about 10 billion won ($9.2 million) in slush fund at the company’s branch in Vietnam.
Choi is suspected to have played a role in creating about 3 billion won of the slush fund allegedly through the company’s subcontractor Heungwoo Industrial from May 2010 to 2013, according to prosecutors. Heungwoo Industrial’s foreign branches supplied materials for a highway construction project in Vietnam and are suspected to have contributed to the slush fund.
He is also suspected to separately have pocketed nearly 1 billion won, including some of the slush fund, from Heungwoo in return for offering business favors to the subcontractor.
He was in charge of overseeing the company’s Vietnam branch at that time as a boss of the branch’s former chief who is already in detention for the investigation, according to prosecution sources.
Earlier Tuesday, prosecutors raided the head office and factory of a company tied to POSCO as part of the investigation.
Authorities confiscated financial statements, transaction records and computer hard disks at the Seoul headquarters of Kosteel Co., which buys steel slabs from POSCO to make wire rods in Pohang, about 370 kilometers southeast of Seoul.
Prosecutors believe the Kosteel chairman, who is known to be friends with former POSCO CEO Chung Joon-yang, helped the global steel giant evade taxes by doctoring their transaction records since 2007. (Yonhap)
