Germany investigates Korean arms broker for corruption charges

Former Navy officer denies all allegations


German prosecutors are investigating a Korean weapons broker for alleged corruption in a large-scale submarine acquisition deal with a German engine manufacturer, local and German media reported this week.

They are looking into the possibility that broker Jeong Eui-seung used some of the commission he received from MTU, a subsidiary of the engine manufacturer Tognum, to bankroll some corrupt lobbying activities, the reports said.

The 72-year-old former navy commander had received 3,990 euros ($5,500) since 2000 until recently for brokering deals concerning Seoul’s procurement of warships, tanks and other weapons from MTU, German daily Frankfurter Allgemeine Zeitung said.

Critics say that this case reveals deep-seated corrupt practices in the defense industry.

Jeong flatly denied the allegations in a local media interview.

“What is clear now is that there is nothing that I offered to Korean military officers as kickbacks or shared with top officials at the German firm. I have also never evaded any taxes in Korea,” Jeong told the Chosun Ilbo.

“Since 2008, I have already been investigated by the state taxation authorities for one year and by the local prosecution for half a year. Then, it was found that I did nothing wrong.”

He said that he would conscientiously respond to the ongoing investigations.

“As the amount of money for the contract is large, such charges might have emerged. If I had been involved in any such corruption cases, my company would not have been in existence like this,” he said.

Jeong formerly worked for a MTU branch office in Korea. In 1983, he established his own weapons brokerage firm. In 1997, he founded the Korea Institute for Maritime Strategy and donated more than 23 billion won ($20.3 million) for its operation.

Jeong also worked in partnership with MFI, an affiliate of Germany’s steel maker Thyssenkrupp, for Seoul’s submarine acquisition project on the condition that he would receive 4-5 percent of the contract money.

Since 2000, he has raked in 95 million euros as brokerage service fees for the acquisition project. The money for the contract between the Seoul government and MFI amounted to 2.5 billion euro.

Korea has purchased key weapons including fighter jets from U.S. firms such as Boeing and Lockheed Martin. But the Navy, in particular, purchased their submarines and warships mostly from Germany.

Seoul has procured or plans to procure 18 submarines from Germany’s Howaldtswerke-Deutsche Werft. The cost for this procurement project amounts to 6.8 trillion won.

Sources said that Jeong has been deeply involved in most of the projects to procure submarines from Germany. Jeong has a wide network of people in the Korean Navy’s leadership, which has apparently helped his brokerage job.

By Song Sang-ho (sshluck@heraldcorp.com)