VN not yet officially informed of Posco’s slush fund
VN not yet officially informed of Posco’s slush fund
Prosecutors raided the offices of three subcontractors of Posco on Tuesday, as part of an investigation into allegations that the company created a slush fund in Vietnam, reported The Korea Times.
According to this newspaper, Seoul Central District Prosecutors' Office said it had collected internal documents and computer hard disks from the subcontractors in question. The three were involved in POSCO's construction projects in Vietnam. Prosecutors also raided the homes of some of the subcontractors' executives.
Some of POSCO's executives in charge of projects in Southeast Asia allegedly created the slush fund of 10 billion won ($8.9 million) by inflating the costs of building expressways in Vietnam from 2009 to 2012 in collusion with local subcontractors, the newspaper said.
The Korean Times reported that investigators raided the head office of POSCO Engineering & Construction in Songdo, Incheon, and the homes of several executives Friday. Meanwhile, executive officials of the subsidiary and its audit division have been questioned.
According to the Korean newspaper, the company said it detected the funds during its own inspection last year and took disciplinary action against those involved, claiming that the money was used as kickbacks to local contractors there. However, the prosecution is looking into the possibility that the group was systematically involved in the slush fund, and that part of the money was transferred to Korea — which POSCO denies. There is speculation that the probe may expand to corruption allegations across the group and other companies.
Concerning the case, Deputy Minister of Transport – Mr. Nguyen Hong Truong - said Friday that the Ministry had not received official information from South Korea and Posco.
"The Noi Bai-Lao Cai highway project was implemented by funding from the Asian Development Bank (ADB) with a total capital of $1.2 billion, including eight packages, which were put out to international tender and then monitored and checked by the donor,” Truong said.
According to Deputy Minister Truong, Posco won 3/8 packages (A1, A2, A3).
The Vietnam Expressway Corporation (VEC) was on behalf of the Ministry of Transport to be the project investor. "During the project implementation, all the procedures of investment management were strictly carried out. Through a preliminary assessment of the State Audit Agency, all projects complied with the procedures," Deputy Minister Truong confirmed.
He said that some Vietnamese newspapers had reported the case with insufficient information. He said the Ministry of Transport would release official information about this issue.
Deputy Minister Truong added that the payment between the main contractor and subcontractors is the rights of contractors. VEC or the Ministry of Transport did not intervene in this issue. VEC paid the contractor based on the real volume of completed works, under the supervision and approval of the consultant and the ADB. This process was carried out in accordance with the law.
