POSCO E&C set to face probe on slush fund charges

POSCO Engineering & Construction, the construction unit of South Korea's top steelmaker, POSCO, may face an investigation over slush funds created by its executives involved in projects in Vietnam, industry sources said Thursday.

The South Korean builder confirmed news reports that some of its employees working on its Vietnamese projects, such as the construction of a new city and roads, were reprimanded in July for operating illegal slush funds worth about 10 billion won (US$9.13 million)

Prime Minister Lee Wan-koo ordered related government agencies to take a closer look into the incident after it was brought up for discussion at a National Assembly hearing that took place earlier in the day.

Two executives and about 10 other employees in charge of construction projects in Vietnam were running the hidden funds, which were exposed via an internal audit that took place in July, according to company officials.

The money, which had been accumulated by exaggerating the amount the South Korean company needed to pay local subcontractors in Vietnam, was later given out as monthly rebates to contractors from 2009 to 2012, officials said.

Those involved, however, were not criminally charged, and instead received disciplinary action within the company without the involvement of any legal authorities.

"After inspecting all the private bank accounts of other employees associated with our business in Southeast Asia and summoning them for questioning, we came to the conclusion that this was not a case of embezzlement," a POSCO E&C official said, adding that it did not seem necessary to alert the authorities. (Yonhap)