State audit board uncovers extensive corruption in missile program

A local defense contractor and government defense officials have been involved in extensive corrupt dealings, incurring billions of won in additional costs in an anti-aircraft missile program, a state watchdog revealed Thursday.

According to the Board of Audit and Inspection, three former and incumbent Defense Acquisition Program Administration officials gave favorable contract conditions to LIG Nex1 in return for a range of kickbacks and favors. 

In connection with the findings, the BAI has requested criminal investigations into three former and incumbent DAPA officials, one LIG Nex1 official and another at a supplier of the company.

The BAI’s findings showed that in 2012, DAPA signed on LIG Nex1 as the supplier of three components of the mid-range surface-to-air missile Cheongung system in a single contract, despite having concluded that separate contracts would provide better terms for the state agency.

The decision, forced through by a former DAPA official identified as A, resulted in additional costs of 17.6 billion won ($16.4 million) for DAPA.

A is also thought to have used his position in the agency to secure a post at a LIG Nex1 supplier, and joined the LIG Nex1 supplier as an executive a month after his retirement from the military in March 2014.

The former DAPA official is also alleged to have manipulated conditions in a contract between LIG Nex1 and another supplier in March 2014. In return, A is said to have been provided with a corporate credit card from the supplier, through which he spent 73 million won for personal purposes.

In addition, the supplier in question hired the former DAPA official’s wife in November 2015, and provided monthly payments of 2.8 million won despite her working only two or three days a week.

The BAI’s investigation also revealed that another DAPA official involved in the Cheongung project supported contract conditions favorable to LIG Nex1 based on information provided by the company. In return, LIG Nex1 hired the official’s nephew in June 2012, while a supplier of the company hired the official’s brother-in-law in September of the same year.

Another DAPA official involved in later parts of the project was found to have rubber stamped a contract favorable to LIG Nex1, incurring an additional cost of 20 billion won.

By Choi He-suk (cheesuk@heraldcorp.com)