Subpar radiator fans sold to military
Police officers announced Tuesday that a local supply company has been busted for selling mislabeled radiator fans to the military over the past decade, a business malpractice that went as far as to affect the Cheonwangbong, the country’s first indigenous 4,500-ton amphibious landing ship.
The lead ship’s unveiling was widely celebrated last year, when the Navy announced it would deploy it for operations in 2015.
Five key employees from the company were charged with fraud, including its 50-year-old CEO, only identified by the name Lee.
Lee is currently in custody, while the four others were booked but not detained, according to the Gyeonggi Provincial Police Agency.
Officers said police conducted the investigation that tracked down the violations, not the military.
The company’s main clients who relied on the fake goods included the Korean Navy, the Army and the telecommunications provider KT.
Police reports indicate that the company had supplied radiator fans - used to cool electronic or telecommunications equipment to prevent overheating - to the military since 1999, when it was granted the rights from a French manufacturing company to exclusively sell the product in Korea. Each was sold at a price ranging between $12 and $50.
The irregularities were found to have begun in 2004, authorities continued, when local war supplies were customized for that specific French model due to its high quality.
Taking advantage of the monopoly, the company discontinued importing the French gear and developed business ties with another company in Taiwan without their clients’ knowledge.
The radiator fans imported from the Taiwanese company were sold with a fake warranty and a forged label bearing the name of the French company that had previously provided the supplies. Costing $4 to $6 each, the fabricated goods were sold to 32 different companies supplying military goods in the defense industry, officers said.
Approximately 100,000 fake products were sold, a scheme that has raised company sales to 4 billion won ($3.6 million) over the past 10 years.
The Taiwanese component, which officers underscored was of poorer quality than their French counterparts, was installed in the Cheonwangbong as well as in other military defense vessels and ammunition carriers.
The low-quality products were also used by KT in about 14,000 of their telegraphic repeaters. When KT requested that the malfunctioning items be repaired, they were replaced with other fakes, police said.
Police officers hinted that the scheme was able to fly under the radar for so long due to difficulties conducting police investigations in the military, in which authorities often refuse to provide necessary information out of fear of leaking classified intelligence.
BY YOON HO-JIN [firstname.lastname@example.org]