SK E&C fined $68.4 million in U.S. military fraud case

SK Engineering & Construction (SK E&C) has been fined $68.4 million by the Western District of Tennessee in a military bribery and fraud case.

SK E&C pleaded guilty to wire fraud and agreed to pay the fine, the U.S. Department of Justice said on Wednesday.

The $68.4 million total consists of $60.6 million in criminal fines — the largest ever imposed on a criminal defendant in the Western District of Tennessee — $2.6 million in restitution to the U.S. Army and $5.2 million in civil penalties to the United States.

The Korean construction company also agreed not to pursue U.S. federal government contracts for the next three years, cooperate fully with the United States in all matters relating to the conduct covered by the plea agreement and to continue to implement a compliance and ethics program to deter violations of U.S. federal law throughout its operations.

The full story of the case goes back to 2008, when SK obtained a large U.S. Army construction contract at Camp Humphreys in Pyeongtaek, Gyeonggi, worth hundreds of millions of dollars.

According to plea documents, SK E&C paid over $2 million to a fake construction company that gave the money to a contracting official with the U.S. Army Corps of Engineers to ensure SK won the deal. It also submitted false documents to cover up that payment.

In 2018, two executives at SK and an SK supplier were indicted by the Western District of Tennessee on a number of charges including conspiracy, major fraud against the United States and wire fraud.

SK admitted that its employees attempted to obstruct criminal investigations, burnt large numbers of documents related to U.S. Army contracts in 2015 and persuaded an individual not to cooperate with U.S. authorities in 2018.

“What we admitted to is not the bribery charge but the wire fraud — that procedures went wrong in the process of transferring and receiving payments for construction,” said an SK E&C spokesman.

A separate criminal trial for bribery in Korea is currently awaiting a second trial. In the first trial in 2018, the two executives were sentenced to up to four years in jail and fined.

BY SONG KYOUNG-SON [song.kyoungson@joongang.co.kr]