After a North Korean submarine sank the South Korean naval frigate ROKS Cheonan in March 2010, the Republic of Korea (ROK) navy decided it needed to improve its anti-submarine warfare (ASW) capabilities. The very next month, two of the navy's existing Super Lynx helicopters, delivered by the British firm Westland in the 1990s, crashed at sea. This combination of events led the ROK's Defense Acquisition Program Administration to accelerate a program to acquire additional helicopters, and a tender was issued later that year.
The resulting ASW helicopter acquisition program proved that corruption can thrive even when security stakes are of the highest order. 46 sailors died in the Cheonan incident and North Korea operates around 70 attack submarines in total. At the same time, Pyongyang is working toward a submarine-launched ballistic missile capability. Yet when ROK naval officials were tasked to evaluate the options for South Korea's new ASW helicopter, key senior officers conspired to fabricate a key assessment report after receiving bribes from Westland's new parent company, Finmeccanica (recently renamed Leonardo). The resulting scandal stemming from the AW-159 acquisition program brought down the retired head of the military as well as a former minister.
Choi Yoon-hee - Former chairman of the ROK Joint Chiefs of Staff (October 2013 – October 2015), chief of naval operations at the time of the evaluations; convicted November 2016 for accepting bribes and sentenced to a prison term of one year, but acquitted on appeal.
Rear Admiral “Park” (no first name published in the press) - Senior Navy official in the acquisition program; charged in June 2015 with fabricating evaluation reports of the AW-159 in 2012.
Kim Yang - Former Minister of Patriots and Veterans Affairs (2008-2011); convicted in January 2016 for accepting USD 1.22 million in bribes to influence the procurement and sentenced to four years in prison.
Ham Tae-heon - Arms manufacturer and broker; convicted in November 2016 on charges of paying bribes to officials on behalf of AgustaWestland and sentenced to two years in prison.
Geoff Hoon - former UK defense secretary and Manager of International Business at AgustaWestland from 2011 to 2016. Hoon was one of Kim's managers at AgustaWestland. Between 2011 and 2016, he was employed by the firm as Manger of International Business. According to a September 2012 email presented at Kim's trial, Hoon asked him to "actively engage in exerting influence over high-ranking decision-makers in Korea."
Summary of Corruption Allegationscontents
To win the contract, AgustaWestland bribed Korean naval officials, to the tune of at least USD 1.3 million (definitely identified) to falsify evaluation reports of the AW-159. The criminal investigation was aided by the prior criminalization of the receipt of money in exchange for lobbying of public officials under the Aggravated Punishment of Specific Crimes act.
South Korea announced its decision to proceed with the AgustaWestland “Lynx Wildcat” AW-159. Prior to the decision, Sikorsky’s “Seahawk” MH-60R were also being considered.
The AW-159 helicopters were delivered in two batches, and the ROK navy is considering a follow-on tender for twelve additional ASW helicopters.
- May 2015
By this time, South Korea's Joint Investigations Team (JIT) had detained three field-grade naval officers on the suspicion that they had doctored the assessment report for the AW-159 back in late 2012.
- Jun 2015
The JIT's investigation worked up the chain of command, arresting a rear admiral surnamed "Park", who in turn revealed the involvement of retired admiral Choi Yoon-hee.
Choi had been chief of naval operations during the course of the tender, and was identified by investigators in late 2015 as the key decision-maker in the conspiracy.
By the time the JIT had completed its work at the end of 2015, it had indicted 74 individuals for involvement in either the AW-159 scandal or for involvement in other corrupt tenders.
- Apr 2016
In Italy, the former CEO of Finmeccanica, Giuseppe Orsi, and the former head of AgustaWestland, Bruno Spagnolini, were tried for bribery in relation to the sale of helicopters to India. While an appeals court convicted the two, they were granted a re-trial in December that year. With the statute of limitations for bribery closing a window for prosecutions at the end of 2017, a Milan court decided to acquit both in January 2018. It is uncertain if Italian prosecutors have incorporated the Korean developments into their investigation.
- Nov 2016
Choi was convicted in November 2016 of receiving USD 17,000 in bribes and sentenced to one year in prison. An appeals court reversed the verdict in July 2017, however; that decision is now being reviewed by the Supreme Court.
- Nov 2016
Ham Tae-heon, who is a U.S. citizen, was convicted alongside Choi in November 2016 and received a two year jail sentence for bribe-giving. His conviction was also reversed.
Kim Yang, a former minister for Patriots and Veterans Affairs, was convicted for receiving bribes in exchange for exerting his influence to secure the tender for the AW-159. He was paid USD 1.22 million for his services to Finmeccanica, and was initially promised up to four times more in payments. Two other named bribe-takers include the president of the Agency for Defense Development Jung Hong-yong, and a researcher at the Korea Institute for Defense Analysis surnamed "Sim".
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Corruption Watch UK, “The Anglo-Italian Job: Leonardo, AgustaWestland and Corruption Around the World,” full report, June 2018, https://docs.wixstatic.com/ugd/54261c_1796bde1633445f0a98ceec15d404203.pdf