Vietnam to inspect projects embroiled in South Korea's slush fund scandal

Thanh Nien News

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A section of Noi Bai-Lao Cai Expressway linking Hanoi and Lao Cai Province that has been found sinking after opening to traffic in 2014. Photo: Mai Ha

The Ministry of Transport has decided to launch an inspection into five packages of two expressway projects contracted to South Korea’s POSCO Engineering & Construction Co., which is embroiled in a slush fund scandal.
Minister Dinh La Thang said in a decision on Thursday that a team of six inspectors will look into the process of selecting contractors, assessing, and making payments to find possible wrongdoings and violations of law.
Any wrongdoings or violations will be punished, Thang said.
Based on the inspection results, the ministry will also make proposals to improve the capacity of state management and ensure the transparency of ODA-funded projects.
POSCO E&C was the main contractor of five packages at Noi Bai-Lao Cai Expressway linking Hanoi and Lao Cao Province and Ho Chi Minh City-Long Thanh-Dau Giay Expressway linking HCMC and Dong Nai Province.
The packages were worth around VND10 trillion (US$463 million). Both projects, invested by the Vietnam Expressway Corporation, lagged behind schedule and had some quality problems.
The scandal 
POSCO E&C won the packages after offering prices lower than the investor’s estimates, by 15-30 percent.
The company is under probe in South Korea for allegedly creating slush funds worth 10 billion won ($8.9 million) by inflating the costs of building ODA-funded expressways in Vietnam from 2009 to 2012 in collusion with local subcontractors.
The company said it had detected the funds during its own inspection earlier and took disciplinary action against those involved, saying the money was used as kickbacks to contractors there.
On Thursday, Kwon Sang Kee, an executive in charge of Southeast Asia of POSCO E&C, sent a letter to the Ministry of Transport and Vietnam Expressway Corporation (VEC) in which he apologized for the nuisance the company caused to the ministry and VEC.
He said local prosecutors are still investigating the company’s executives involved in the slush fund scandal and the company will provide the ministry and VEC with official information about the results after the prosecutors finished their work.

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