POSCO. illegally buys back its own shares through Pohang University

Rep. Ahn Young-Keun of the main opposition Grand National Party claimed Wednesday that Pohang Iron & Steel Co. (POSCO) is illegally buying back its own shares in large volumes through Pohang University of Science and Technology (POSTECH). He said that 327.3 billion won, or 51.5 percent of the fund for POSTECH development worth 635.4 won, has been spent on POSCO stocks so far.

In a parliamentary inspection of POSCO, the lawmaker argued that POSTECH spent 251.9 billion won to buy 2.02 million shares of POSCO from Dec. 20 last year until February, and began to purchase an additional 820,000 shares from last September. As a result, the number of POSCO shares held by POSTECH increased from 186,000 before December last year to the current 3,028,200 shares, which make up 3.14 percent of the total POSCO shares.

Rep. Ahn also contended that as the POSCO share price continued to fall, from 160,000 won last December to the current price of 65,000, POSCO suffered losses of more than 100 billion won in the stock buying.

He said that POSCO¡¯s contribution to the university was only worth 30 billion won last year but the amount suddenly increased to 300 billion this year. The lawmaker then called on the steelmaker to suspend the financial donations, which are suspected to aim at securing favorable investors much like the illegal mutual investment activities of chaebol.

Sun Dae-In eodls@donga.com