FTC punishes Posco for filing false informationThe nation’s largest steelmaker, Posco, has been excluded from the Fair Trade Commission’s list of excellent companies for submitting fabricated performance data concerning implementation of the Fair Trade Agreement regarding transactions with subcontractors.
The FTC said yesterday it will deprive Posco of benefits like exempting the company from the FTC’s survey and investigations of subcontracting transactions for two years.
Posco was rated excellent in the FTC’s assessment of shared growth index for 2011.
It is the first time that a large conglomerate has submitted fraudulent data, and the FTC decision to exclude the nation’s top steelmaker is also unprecedented.
The FTC action is another black mark for the leadership of Posco Chairman Chung Joon-yang, who is already under pressure to resign.
The issue was triggered by a whistle-blower at Posco, who reported the company lied when it said it posted three guidelines of the Fair Trade Agreement on April 29, 2011, that were actually posted in January 2012.
Through the FTC’s computer log, the antitrust watchdog verified that the submitted date was wrong.
A copy of the internal review board measures regarding transactions with subcontractors on June 12, 2011 also was not submitted until January after the company reprocessed it.
The whistle-blower’s information was received in July 2012 at the Anti-Corruption and Civil Rights Commission, and the investigation took four months after that. The FTC conducted an on-site investigation and probed those related to the manufacturing and submitting of the fraudulent data.
“Although Posco’s false data submission is not a large part of the implementation performance of the Fair Trade Agreement - 1.7 points out of 100 in terms of shared growth ratings - it undermines credibility, so we decided to take effective measures to prevent any recurrence,” said a spokesman for the FTC.
The FTC also requested the National Committee for Corporate Partnership swiftly scrap Posco’s excellent grade in the shared growth index for 2011.
“In the future, we plan to cross-check large conglomerates as well as subcontractors through on-site inspections and revisions of related regulations, such as introducing specific criteria to determine false data.”
The false data calls into question Posco’s claim in June that it had implemented new ethical management that contained standards of behavior adhering to international codes of ethics.At the time, Posco clarified its commitment to multifaceted and comprehensive ethical management like introducing compensation for reporting unethical management practices and vitalizing ethical practices ombudsman and leaders of corporate ethics.
The FTC and Posco are in administrative litigation of more than 93.8 billion won of penalties for price-fixing in the steel industry. Last year, Posco sued the FTC over the fines.
The tension between Posco and the FTC continues as the final result of the case is still pending.
BY KIM JUNG-YOON [email@example.com]
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