The prosecution additionally accused him of offering deals worth 1.2 billion won to small maintenance company TM Tech, run by a close aid of former President Lee Myung-bak’s elder brother Lee Sang-deuk.

In return, the 79-year-old former ruling Saenuri Party lawmaker allegedly exerted influence on government officials to appoint Chung as POSCO chairman and to lift planning restrictions so the company could resume its construction of a new steel factory in 2011. He was indicted without detention on influence peddling charges.

The prosecution indicted former POSCO vice chairman Dong-hwa for creating a slush fund worth $5 million in Vietnam during his term in the office and embezzling a total of 1 billion won. He allegedly took kickbacks including cash and golf trips from the subcontractor in return for granting it business deals. He also gave an executive position at POSCO to a high-ranking government official’s high school friend in early 2011.

Bae Sung-ro, another key figure at the center of the corruption scandal, was indicted on charges of fraud. The former chairman of Dongyang Construction allegedly covered up his company’s financial records to win construction bids and loans from state-run banks. He allegedly received preferential treatment from POSCO leaders in exchange for kickbacks and creating slush funds for POSCO and its affiliates.

As a result of the probe, the prosecution shed light on widespread corruption cases stemming from the formerly state-run POSCO’s heavy reliance on the government, its leadership’s cozy relations with politicians and lax management.

POSCO, which was established under the rule of former President Park Chung-hee and run by the government since then, began its privatization process in 1998 in the face of the Asian financial crisis.

Though POSCO was completely privatized in 2000, its operation and appointment of the chief executives have been greatly swayed by the government.

“As POSCO doesn’t have a family owner, there were cases in which company executives with only a limited term colluded with politicians and gave favors to certain subcontractors (in connection with them),” an official from the prosecution said.

But prosecutors came under fire for dragging out the probe over months without a visible outcome, possibly taking a toll on the steel giant’s business. Their multiple requests for detention warrants for Chung and Bae were rejected in the process due to a lack of evidence.

The prosecution indicted a total of 32 people, mostly from POSCO and its subcontractors. Among them, 17 were detained.

It plans to continue probing the six-term lawmaker Lee Byung-suk of the ruling Saenuri Party to see whether he was involved in the corruption case.

By Ock Hyun-ju (laeticia.ock@heraldcorp.com)