ROK Scandal for Thwarting Defense Procurement Offsets
The Korea Times reports that state auditors caught the Defense Procurement Agency using certificates from civilian brokers that falsely claimed to have made millions of dollars worth of exports, allowing the DPA to go ahead with corresponding imports of goods such as small helicopters. South Korea (aka. the Republic of Korea) generally requires foreign countries or firms buy some of Korea’s own defense goods as part of procurement deals. Korea mandates that these offsets exceed 30% of any procurement purchase or include technology transfers.
Donga reports that the imports included helicopters and naval weapons purchased between 2000 and 2003 for roughly $43 million. A former DPA official and another civilian produced certificates for $13 million of goods sold to foreign arms maker that Korea’s Board of Audit and Inspection (BAI) alleges never changed hands. In return, the two brokers are alleged to have pocketed $190,000 from foreign companies.
The BAI also criticized the Agency for Defense Development for passing a blind eye over these transactions, as well as for failing to put much scrutiny on the real value of technology transfers made. A BAI statement accused the defense agency of worrying primarily about its procurement needs and “did not consider the characteristics, value and necessity of such technology although it is key to such a deal.”
Just last month, the leftish ruling party in South Korea passed a new defense process bill to increase civilian involvement in and oversight over procurement.
Interesting sidenote: The helicopter pictured above is an MD-500 Defender. GlobalSecurity.org notes that in 1985, North Korea circumvented United States export controls to indirectly buy eighty-seven United States manufactured civilian D-500 helicopters before the United States government stopped further deliveries. Reports indicate that at least sixty of the helicopters delivered were modified as gunships. Because South Korea licenses and manufactures the MD-500 for use in its armed forces, the modified helicopters are useful for North Korean covert or commando operations.
