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KAI, maker of planes, is raided for corruption

July 15,2017
State prosecutors on Friday raided several offices of Korea Aerospace Industries Co. (KAI), the country’s sole aircraft manufacturer, on allegations of corruption in a set of major defense projects.

Dozens of investigators from the Seoul Central District Prosecutors’ Office searched KAI headquarters in Sacheon, 437 kilometers (294 miles) south of Seoul, and its office in Seoul for evidence related to the allegations that it inflated expenses for developing military aircraft, and pocketed illicit gains in the process.

They confiscated the company’s accounting books, computer hard drives, mobile phones and other materials in their probe seen as part of the Moon Jae-in government’s broader campaign to stamp out deep-seated corruption in the defense industry.

A source in the prosecution said that it has barred several top KAI officials, including CEO Ha Sung-yong, from leaving the country pending the investigation. They are expected to face questioning after the prosecution finishes analyzing the seized materials.

KAI has been involved in high-profile defense projects to develop the Surion utility helicopter, T-50 supersonic trainer jet and FA-50 light attack fighter. In 2015, state auditors found KAI gained illicit profits worth 24 billion won ($21 million) by manipulating development costs for the Surion project.

“It is not that we are looking only at specific products regarding the allegations that KAI inflated the development costs,” a prosecution official said on condition of anonymity. “What matters is that the issue is linked to how taxpayers’ money has been spent.”

Since the May launch of the Moon administration, it has stressed a strong will to eradicate corruption in the weapons acquisition sector, which has long been blamed for eroding the country’s military capabilities.

During Moon’s election campaign earlier this year, he warned against any corrupt practices in the process of procuring military products, comparing them to “activities benefiting the enemy.”

Yonhap