Criminal or Incompetent?
The Board of Audit and Inspection (BAI) requested a prosecution investigation for alleged corruption related to an overseas resources development project of SK Innovation.
The state auditor said that it found out that high-ranking officials from the Ministry of Knowledge Economy (MKE), which is now the Ministry of Trade, Industry and Energy (MOTIE), illegally reduced the principal and interest that SK Innovation received in the form of a “conditional loan” from the government for its overseas resources development project in 2011.
The BAI believes that SK Innovation offered bribes to high-ranking government officials in a bid to pay less to the government, even though the company carried out its overseas resources development project with national subsidies.
A total of six executives, including the deputy minister of the then-MKE, will be investigated by the prosecution.
According to the BAI, SK Innovation purchased three lots of an oilfield in Brazil for US$750 million (818.25 billion won) in 2000. The price of the lots soared 10 years after the investment, and the company then sold them to Danish business conglomerate Maersk in Dec. 2010, making US$2.4 billion (2.54 trillion won) in profit.
SK Innovation borrowed about 10 percent of the contract money, or US$77 million (about 80.8 billion won), as a conditional loan. It is a special corporate financing program for risky overseas projects, under which the government writes off debt if the projects fail. Since the project succeeded, the firm should have given US$658 million (690 billion won) back to the government according to the contract terms.
However, it allegedly reduced the amount by US$128 million (134 billion won) by bribing high-profile officials, and only paid the rest to the government, according to the BAI.
SK Innovation denied the allegations, saying, “When investment projects succeed using conditional loans, the government and the private firm divide the profits after deducting the operating expenses of the investment lots. The 130 billion won should be the amount of deductions, but the BAI mistook it for reduction. The allegations are based on a misunderstanding of the contract terms.”