Vietnam probes Posco E&C on slush fund reports

Home > Business > Industry

print dictionary print

Vietnam probes Posco E&C on slush fund reports

Posco Engineering & Construction (E&C), which is being investigated by prosecutors for an alleged slush fund worth 10 billion won ($9.1 million) in Vietnam, will be probed by the Vietnamese government to see where the money came from and what it was used for.

According to Vietnamese media on Monday, the local government has formed a team consisting of six government officials from the Ministry of Transport, Finance Department, Department of Science and Technology, and Department of Transport Construction and Quality Management after it saw Korean media reports on Posco E&C’s troubles.

They said Hanoi is worried that the slush fund was used to pay off people in charge of giving the company orders for construction projects.

The inspection team will be led by the Transport Ministry’s Deputy Chief Inspector Le Van Doan.

In 2009, the company won a bid to build three sections or 81 kilometers (50.3 miles) of the 244-kilometer Noi Bai-Lao Cai Expressway. It also won a bid to build two sections or 23.7 kilometers of the 54.9-kilometer Ho Chi Minh City-Long Thanh Dau-Giay Expressway in 2013. All the work was funded by the Vietnam Expressway Corporation (VEC).

The Noi Bai-Lao Cai Expressway project is worth 1.37 trillion won.

The 27-kilometer A1 section was completed on Dec. 27, 2013, and the 22-kilometer A2 section was completed last April 6.

The inspection was launched on Friday, and over the next 45 days the team will look into the selection of contractors and acceptance of payments and settlements to detect any violations of the law, although the VEC already said in a statement last week that the bidding for the projects was fair and transparently conducted. It added that the Noi Bai-Lao Cai Project was already audited by the State Auditor and no violations were found.

“For the time being, we can only confirm that the Vietnamese government has launched an inspection, but we can’t tell whether any of our officials there were summoned or investigated since it is an ongoing case,” a spokesman for Posco E&C told the Korea JoongAng Daily. “We will sincerely cooperate with the [Vietnamese] government.”

According to local media, Kwon Sang-kee, an executive of the company’s Southeast Asian branch, sent a letter to apologize to the Vietnamese Transport Ministry and VEC for being the subject of such an investigation and also apologized for the behavior of a former executive surnamed Park who is suspected to have played a key role in creating the 10 billion won slush fund.

Park is currently being investigated over whether he was ordered by higher officials to create the fund. Park is also suspected of embezzling about 4 billion won from the fund and providing kickbacks to local authorities involved in construction projects.

The letter was a response to a letter from the VEC asking Posco E&C to explain the slush fund allegations, according to local media.

Kwon reportedly said in the letter that the company can’t give any information for the time being as the case is under investigation.

BY KWON SANG-SOO [kwon.sangsoo@joongang.co.kr]

More in Industry

Export growth of 6% seen by KITA next year

Big companies, fearing the worst, scramble for cash

Hyundai unveils one-size-fits-all electric vehicle module

Hyosung stretches Brazilian spandex production amid yoga pants boom

No layoffs or monopoly concerns, Korean Air promises

Log in to Twitter or Facebook account to connect
with the Korea JoongAng Daily
help-image Social comment?
lock icon

To write comments, please log in to one of the accounts.

Standards Board Policy (0/250자)

What’s Popular Now