Prosecutors raid POSCO unit in corruption probe

Prosecutors on Wednesday raided a subsidiary of South Korea’s leading steelmaker POSCO over corruption allegations involving its officials.

A team of prosecutors obtained computer hard drives, account books and steel trading records from the offices of POSCO P&S in Gangnam, Seoul, to corroborate the charges, the prosecution said.

“The raid is solely focused on POSCO P&S, and not the whole group,” an investigator told media on Wednesday.

POSCO P&S officials said in a statement that they would fully cooperate with the investigation.

“We will heavily punish those responsible as a warning to others,” POSCO P&S said. 

But local reports have suggested that the prosecution may widen its probe to POSCO group, as the subsidiary’s core business is largely related to the group’s overall steel business, including manufacturing, sales and resource recycling.

Officials from the group played down the possibility of the investigation spreading to the steel giant.

“The irregularities are known to have been done by some officials of the affiliate. It’s difficult to think that the accusations are connected to the group” POSCO public relations official Kim Min-hee told The Korea Herald.

POSCO, the country’s top steelmaker, with 45 affiliates under its wing, underwent a tax audit for irregular practices in September without prior notice. 

POSCO P&S was not part of the audit, Kim said, though there might have been some documents linked to the subsidiary’s business records.

Following the inspection, the Seoul Regional Tax Office is known to have reported the group to the Seoul Central Prosecutors’ Office after finding evidence of attempts to increase sales records with unfair contracts.

As for the probe into POSCO P&S, the National Tax Agency might consider imposing a penalty if illegal practices are found in the ongoing investigation that is set to end this month.

POSCO P&S is a company specializing in manufacturing steel construction materials and nonferrous products. Last year, it recorded an operating profit of 28.9 billion won ($27.8 million) and 2.74 trillion in sales.

By Suk Gee-hyun (monicasuk@heraldcorp.com)