Another Arrest Warrant Issued in Arms Broker

luvsmiling, March 13, 2015, 10:54 a.m.

Prosecutors sought an arrest warrant Thursday for the chief of a major local weapons brokerage firm over alleged corruption related to a state project to purchase an electronic warfare training system from Turkey.  Lee Kyu-tae, the 66-year-old chairman of Ilgwang Group, is charged with inflating the price of the Electronic Warfare Training System (EWTS) for the Air Force and creating a slush fund.

Ilgwang Gongyeong, the group's arms dealing unit, brokered the 136.5 billion won (US$120.9 million) deal secured in 2009 between South Korea's procurement agency, the Defense Acquisition Program Administration (DAPA), and the Turkish defense company Havelsan.

"Though the suggested cost of introducing the equipment was some $50 million, Lee swindled the Seoul government out of about $46 million by inflating the price to $96 million," said an official of the pan-governmental task force on corruption in the defense industry.

"The focus of the investigation will be on where he has spent the money," the official added. Some have raised suspicions that Lee exaggerated the unit price to get a rebate from Havelsan, and bribed Air Force officers here and DAPA officials involved in the project.

Prosecutors believe that Lee was able to reduce the cost for the EWTS production by having his affiliates participate in the project as subcontractors and letting them provide substandard parts for the equipment. At the point of the EWTS introduction, there had been a controversy that the system failed to meet the military's requirements and to fit the country's security circumstances.

The platform is designed to train pilots with electronic countermeasure devices against interceptors and artilleries from enemies, including North Korea, to improve the pilots' ability to survive and to boost the country's anti-aircraft capabilities.

The chief also faces allegations that he illegally acquired classified information on a state project to upgrade unmanned aerial vehicles.  Lee, who founded the defense firm in the mid-1980s, has worked as an arms dealer for more than 30 years. He was arrested in 2009 on embezzlement charges while being involved in the country's weapons purchases from Russia.

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