The state audit agency said Thursday it has opened a three-month inspection into overseas resources development projects carried out under the former Lee Myung-bak administration.

The move by the Board of Audit and Inspection of Korea (BAI) comes amid a widening prosecution investigation into the so-called energy diplomacy of the former administration, which is believed to have incurred massive losses and budget waste.

Steel manufacturer POSCO, construction firm Keangnam Enterprises Ltd. and the state-run Korea National Oil Corp. are currently facing prosecution probes on suspicions of slush fund creation and misuse of state funds linked with their state-financed overseas projects.

The BAI's inspection, which started on Wednesday, covers government bodies and state-run firms, including the Ministry of Strategy and Finance, the Ministry of Trade, Industry & Energy as well as KNOC which led overseas energy projects under the administration.

A total of 35 officials are engaged in the audit that will last till late June, according to the audit agency,

The focus of the inspection will be put on assessing the performance of energy deals under the Lee administration as well as how loss-making deals could be restructured rather than irregularities committed, according to the state agency.

The state agency also plans to look into the state overseas energy financing system in which loss-making energy developers are often given exemption from the repayment of energy policy loans. (Yonhap)