Ministry of Defense Cheated Out of 36.8 Billion Won

Ministry of Defense Cheated Out of 36.8 Billion Won. July. 13, 2005 04:12. by Kang-Myoung Chang tesomiom@donga.com.

It was revealed that in the process of importing arms, the Ministry of National Defense (MOD) was swindled out of tens of billions of won by local brokers.

The Board of Audit and Inspection announced the results of auditing the Defense Procurement Agency on July 12 and disclosed that while importing weapons worth a total of 100 billion won, including small-sized helicopters and weapons for naval vessels from January 2000 to March 2003, the MOD incurred heavy losses of about 36.8 billion won by being swindled by three arms brokers.

It is a usual practice that when importing arms worth $10 million or more from foreign countries, the MOD should sell local products amounting to about 30 percent of the price of the arms to the foreign arms corporations or be introduced to cutting-edge technologies in exchange for the deals. However, the MOD let this practice slide.

According to the Board of Audit and Inspection, when the MOD introduced small-sized helicopters worth a total of $43 million from T, a multinational company, in 2000, two brokers, including Lee (61) who had worked for the Defense Procurement Agency, submitted a forged certificate of exportation report to the MOD by camouflaging local products worth a total of $13 million being purchased by T.

The MOD finalized the deal based on this falsely-written report without separate confirmation. In the process of finalizing the deal, Kwon (52) in charge of this deal in the Defense Procurement Agency, reportedly tipped off the MOD’s internal information to Mr. Lee.