Former chairman indicted in Posco graft probe

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Former chairman indicted in Posco graft probe

Prosecutors on Wednesday indicted former Posco Chairman Chung Joon-yang, one of the key figures in an investigation into corruption allegations against the country’s top steelmaker, over allegations of bribery and breach of trust.

His indictment came as the Seoul Central District Prosecutors’ Office announced the interim results of its months-long probe into the corruption scandal surrounding Posco. So far, 32 people have been indicted, including 17 of the steelmaker’s current and former executives.

The others included subcontractors and business partners. Most of the 17 key Posco officials involved in the case, including Chung, were indicted but were not detained.

Chung, 67, stands accused of violating the act on specific economic crimes, accepting bribes and wielding his influence over questionable mergers and acquisitions between February 2009 and March 2014.

He is accused of buying a large stake in Sungjin Geotec, an industrial equipment manufacturer, to merge into Posco Plantec, an arm that produces steel manufacturing facilities, in 2010 for 160 million won ($138,405), resulting in 159.2 billion won in losses for Posco.

“During Chung’s term, his links with the political circle led Posco’s business profits to decrease by 4.1778 trillion won, and its debt increased by 20 trillion won,” the prosecution stated.

Officials further pointed out that at the end of 2008, before Chung became chairman, Posco had 32 subsidiaries and affiliates, which increased to 67 over the course of three years - a 209 percent increase - “while various financial situations markedly grew worse.”

Chung is also accused of providing 1.2 billion won in kickbacks in 2009 to TM Tech, run by a close aide of Lee Sang-deuk, a former lawmaker and the older brother of former President Lee Myung-bak.

In return, Lee is said to have influenced clearing with Defense Ministry officials Posco’s plan to enable the company to build steel manufacturing plants.

Prosecutors also accused former Posco E&C Vice President Chung Dong-hwa of embezzling $3.85 million in Vietnam between 2009 and 2013, and taking 185 million won in kickbacks from a construction broker surnamed Jang, who prosecutors claim had political backing.

Another key figure in the scandal, former Dongyang E&C Chairman Bae Seong-ro, was indicted without detention on charges of fraud for allegedly doling out kickbacks and creating slush funds for Posco and its affiliates.

Prosecutors have conducted a series of raids on Posco’s subcontractors and subsidiaries since March, when the government declared a war against corruption.

“Posco apologizes to all the people concerned and the public for causing anxiety,” a Posco spokesperson said through a press release on Wednesday following the prosecution’s report. “Following the announcement of the investigation results, we will thoroughly review the company’s entire management structure.

It also pledged greater transparency and competitiveness in the future.

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