Prosecutors query Park on deal with Posco in ‘pi-city’

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Prosecutors query Park on deal with Posco in ‘pi-city’

The prosecution’s investigation into Park Young-joon, a key presidential associate, expanded further over the weekend as a new allegation was revealed that he had several phone conversations with officials from Posco ICT, a subsidiary of Posco Group.

The revelation comes after last week prosecutors raised allegations that Park was involved in Posco’s takeover of a lucrative development project in southern Seoul.

This raised suspicions that close aides to President Lee Myung-bak, dubbed as the “Yeongpo Line,” may have been involved in Posco Group’s business in general, giving favors to a company based in Pohang, President Lee’s hometown.

Park, the former vice minister of knowledge economy, was accused of receiving bribes from a former developer of the 2.4 trillion won ($2.1 billion) “pi-city” project in Yangjae-dong, southern Seoul, in return for his influence to expedite the construction approval process.

Last Monday, the Seoul Central District Court granted a pre-trial detention warrant against Park for further questioning.

Prosecution sources had discovered that Park was suspected of using a mobile phone registered under a third party’s name to talk with the president of the Posco Group in July and August of 2010. Five to six suspicious calls were recorded, the sources said.

The prosecution said the timing of the phone calls was dubious. In July 2010, Woori Bank, the main lender for the pi-city project, signed a deal with Posco Engineering & Construction making it the new builder. The bank also filed for court receivership in August 2010. At the time, Park was serving as vice minister of state affairs for the Prime Minister’s Office.

The latest development into the investigation revealed that Park is suspected of having several phone conversations with a senior executive of Posco ICT in July and August of 2010, using the same borrowed phone as the one he used to call the president of the Posco Group.

The special investigation unit of the National Police Agency also began an investigation into Lee Jung-bae, a former developer of pi-city, on charges of embezzlement and breach of trust.

Lee was later accused of bribing senior officials of the administration including Park, to speed up the stalled pi-city project. The project was supposed to be the country’s largest complex of malls, logistics centers and offices at the site of a former cargo terminal in southern Seoul.

The project began in 2004, but saw little progress due to sluggish issuance of construction permits from the city government. A depressed real estate market and financing troubles further bedeviled the project, and the approval was only made in November 2009.

Lee, the initiator of the project, has claimed that “big shots” in the Lee administration stole his stake in the lucrative project and awarded it to one of the country’s largest builders.

Denying that his phone calls with the Posco executive in 2010 were linked to the pi-city project, Park said he called him just to exchange greetings.

The prosecutors are also looking into other suspicious money transactions possibly linked to Park. Lee Dong-jo, a Pohang-based businessman currently staying in China, was accused of managing Park’s slush funds, and the prosecutors believe Lee is the key to resolve a series of graft allegations involving Park.

The prosecution has asked Lee to return to Korea to submit to questioning, but Lee did not say when he would return. A prosecution source said the central investigation unit of the Supreme Public Prosecutors’ Office discovered suspicious deposits and withdrawals, totaling about 100 million won ($87,000) in a bank account managed by Lee.

The prosecution questioned some businessmen in Pohang who wired the money and they said they gave the sums to Park to spend as pocket money. The transactions were made in late 2008 and late 2010, and Park was not holding public office at the time.

The nature of the transactions was expected to be confirmed only after questioning Lee, the source said adding that the prosecution is considering sending an official subpoena to force Lee to return from China.

By Ser Myo-ja, Lee Dong-hyun [myoja@joongang.co.kr]


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