Lobbyist arrested in bribery scandal

A retired Navy captain has been arrested on charges of orchestrating a series of irregularities linked to $192 million worth of defense contracts.

The Seoul Central District Prosecutors’ Office announced yesterday that it had arrested a 60-year-old arms dealer only identified as Kim on Wednesday. Kim, who once served as the chief project manager in the Navy’s shipbuilding division, a predecessor of the Defense Acquisition Program Administration (DAPA), is suspected of perpetuating a massive bribery scheme linked to weapons procurement projects.

Prosecutors requested a warrant yesterday to detain him for further investigation.

A special unit within the prosecution recently launched an investigation looking into a bribery network among Naval Academy alumni after a relatively obscure company won more than 10 contracts totaling $191.77 million from 2009 to 2012 for major naval procurement projects, one of which involved the controversial Tongyeong salvage and rescue ship.

The Navy commissioned the Tongyeong project with the intent to build a next-generation rescue and salvage ship. The vessel, which cost 159 billion won ($145 million), was completed in 2012.

The Navy, however, refused to accept its delivery, complaining that its equipment - including the sonar systems - didn’t function properly, while the builder, Daewoo Shipbuilding and Marine Engineering, blamed DAPA for providing it with the substandard systems.

Kim allegedly received bribes worth hundreds of million won from the head of Hackenco in 2010 in return for introducing him to an official at DAPA. The 45-year-old CEO of the American naval and marine equipment supplier, identified by his surname Kang, said he wanted to supply sonar systems and remotely operated underwater vehicles, commonly known as ROVs, for the Tongyeong and another project to build advanced minehunters.

Kim graduated from the Naval Academy three years earlier than the current Navy Chief of Staff, Admiral Hwang Ki-chul, who signed off on the contracts with the Hackenco when he worked as the chief director of DAPA’s shipbuilding division.

According to the prosecution, Kim had arranged meetings between Kang, the Hackenco CEO, and a retired lieutenant colonel, only identified as Choi, in charge of both shipbuilding projects. Choi was arrested last month on charges of receiving 510 million won for doctoring bidding documents so that Hackenco could win the sonar-system supply contracts, worth 70 billion won.

Prosecutors are currently questioning Kim to determine if he also had a hand in influencing other defense contracts. Over the past few years, Kang won supply contracts worth $191.77 million, which included the Tongyeong project.

Hackenco has no record of winning any defense contracts in Korea before 2009. After the American manufacturer hired Kim as its lobbyist, the firm won 10 major contracts in Korea’s Navy.

The prosecution said it is also expanding its investigation to determine if Kim may have lobbied Admiral Hwang, who issued the final approval for Hackenco’s sonar systems supply contracts at the time. “Our investigation so far shows that Hwang did not know about the forgeries committed by junior officers to award the contracts to Hackenco,” a source at the prosecution said.

The prosecution added that it plans to create an investigation team with military prosecutors to expand its probe into other irregularities involving defense contracts. “We want to root out the corrupt ties between defense contractors and incumbent military officials, and we are looking for effective ways to do so,” a senior official from the Supreme Prosecutors’ Office said.

The joint probe by the prosecution and the military will enable investigations into current officers in the Army, Navy and Air Force, including generals, over suspected bribery allegations linked to major procurement programs.

President Park Geun-hye already vowed last month to eradicate irregularities surrounding defense procurement projects, calling them “acts to serve the benefit of the enemy.”

BY SER MYO-JA, Jung Hyo-sik [myoja@joongang.co.kr]