Daewoo contractor under slush fund probe

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Daewoo contractor under slush fund probe

Prosecutors yesterday raided a contractor to Daewoo Shipbuilding and Marine Engineering as part of a probe into a political slush fund involving the nation’s second biggest shipbuilder.

The opposition Democratic Party has alleged the slush fund was used to bribe officials close to the Lee Myung-bak administration, including Lee Jae-oh, the newly appointed minister without portfolio.

Investigators from the Seoul Central District Prosecutors’ Office raided the offices of Imchun Industrial in Geoje, South Gyeongsang, and the homes of the firm’s executives yesterday morning.

Computers and financial documents were seized from 10 locations, the prosecution said. Some top Imchun managers were banned from leaving the country.

Imchun provides ship parts to Daewoo Shipbuilding. It received advanced payments of 57.3 billion won ($49 million) from Daewoo Shipbuilding in 2008 and allegedly used some of the money to create a slush fund, according to prosecutors.

Since June, prosecutors have been investigating the transaction records of some bank accounts linked to Imchun and found evidence of the secret funds, sources said.

There are questions whether Imchun used the slush fund to make kickback payments to Daewoo Shipbuilding’s top management, including Nam Sang-tae, its president.

The Democrats have alleged that Nam used the money to bribe top officials to keep his job. Daewoo Shipbuilding’s leading shareholder is the state-owned Korea Development Bank. Nam was appointed as president in March 2006 under the Roh Moo-hyun administration. He was reappointed to the post in March 2009, fueling rumors about his lobbying activities.

Last month, Kang Gi-jung, a DP lawmaker, alleged that Chun Shin-il, a businessman and close friend of President Lee, had helped Nam keep his job.

The Democratic Party also attacked Lee Jae-oh, a key adviser to the president, when he ran as a candidate for the ruling party in the July 28 by-elections, alleging he was linked to Daewoo Shipbuilding as well. The DP claims Lee Jae-oh’s allies were working as advisers to the shipbuilder and were providing his campaign with slush funds from the firm.

Lee won the election and was named as minister without portfolio in the latest cabinet reshuffle. The Democrats said they will question him about his alleged ties to the shipbuilder during his confirmation hearing. Daewoo has denied the allegations.

By Ser Myo-ja, Lee Chul-jae [myoja@joongang.co.kr]
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