Slush fund of $8.9 million in Vietnam has been detected
POSCO and its subsidiary POSCO E&C have been investigated on account of accusations regarding an $8.9 million slush fund held in Vietnam, according to Korea media. The group is said to have exaggerated the costs of building an expressway in Vietnam from 2009 to 2012 in collusion with subcontractors.
However, POSCO have told the media that it was the group itself that detected irregularities during self inspection and that those involved have been punished. The money was supposedly used to purchase gifts for subcontractors.
Korean inspectors suspected that the fund would flow to Korea, but POSCO have denied the accusation.
Most recently, a former leader referred as Mr. Park of POSCO was arrested on suspicion of orchestrating the slush fund during his capacity as project director in Vietnam. He was accused of embezzling 40 per cent of the funds during his time in Vietnam from 2009 to 2012.
Mr. Park and POSCO E&C said that the cash was used to pay for subcontractors. However, Korean inspectors claim the majority was used for other purposes.
POSCO Chairman Mr. Chung Joon-yang and other senior figures have been told not to travel abroad during the investigation. The organization's offices in Songdo and Incheon have been searched thoroughly by police.
In March, inspectors arrested three subcontractors suspected of involvement while expanding the investigation according to the Korean media said.
POSCO has been also been linked to another multi-million dollar slush fund in Indonesia, this time through alleged exaggeration of land lease costs to build a steel factory.
The company has invested in many projects in Vietnam. It has been involved in work on the Noi Bai - Lao Cai expressway according to Deputy Minister of Transportation, Mr. Nguyen Hong Truong, as well as the Long Thanh - Dau Giay project.
The Deputy Minister said that Vietnam Expressway Corporation (VEC) had completed procedure as per Vietnamese policy. Both VEC and the Ministry of Transportation (MoT) not manage or involve themselves in payment of POSCO or its contractors.
In regards to a possible slush fund in Vietnam, Mr. Truong said that he was waiting for an official statement from Korea.