South Korea’s AW-159 Helicopters


Contents
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Introduction
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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.


Case details
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Seller country: United Kingdom, Italy
Seller company: Finmeccanica, AgustaWestland
Buyer country: South Korea
Goods category: Aircraft
Equipment sold: 8 AgustaWestland AW-159 Wildcat Anti-Submarine Warfare (ASW) helicopters
Deal value: USD 570 million (USD 370 million for the helicopters, the remainder for related systems)
Start year: 2013
Outcome status: Trial Closed - Some Convictions

Dramatis Personae
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  • 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.


Summary of Corruption Allegations
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To win the contract, AgustaWestland bribed Korean naval officials, to the tune of at least USD 1.2 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.


Timeline
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  • 2013

    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.

  • 2016

    The AW-159 helicopters were delivered in two batches, and the ROK navy is considering a follow-on tender for twelve additional ASW helicopters.


Investigation Outcomes
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  • 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.

  • 2015

    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.

  • 2015

    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.

  • 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.

  • 2016

    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.”


References
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  • Jung Sung-ki, “Navy looking for 20 new anti-sub helicopters by 2014,” The Korea Times (online), May 25, 2010, http://www.koreatimes.co.kr/www/news/nation/2010/05/205_66497.html.

  • “Ranking Navy officer arrested in corruption scandal,” Yonhap News Agency, June 5, 2015, http://english.yonhapnews.co.kr/news/2015/06/05/0200000000AEN20150605007700315.html.

  • “Wildcat maritime choppers arrive in S. Korea,” Yonhap News Agency, June 13, 2016, http://english.yonhapnews.co.kr/national/2016/06/13/0301000000AEN20160613007000315.html.

  • Amy Watson, “South Korea is rocked by defense corruption scandal,” The Scotsman (online), July 16, 2015, https://www.pressreader.com/uk/the-scotsman/20150716/281951721499708.

  • Kang Seung-woo, “Ex-JCS chief facing corruption probe,” The Korea Times (online), Oct. 7, 2015, http://www.koreatimes.co.kr/www/news/nation/2015/10/116_188230.html.

  • Jun Ji-hye, “FBI’s help sought in defense corruption probe,” The Korea Times (online), Nov. 16, 2015, http://www.koreatimes.co.kr/www/news/nation/2015/11/116_191087.html.

  • Kim Se-jeong, “Ex-JCS head questioned over bribery allegations,” The Korea Times (online), Nov. 24, 2015, http://www.koreatimes.co.kr/www/news/nation/2015/11/116_191716.html.

  • Kim Rahn, “Ex-JCS head indicted for bribery,” The Korea Times (online), Dec. 20, 2015, http://www.koreatimes.co.kr/www/news/nation/2016/08/113_193586.html.

  • Lee Kyung-min, “Former veteran affairs minister gets 4 years in prison for bribery,” The Korea Times (online), Jan. 11, 2016, http://www.koreatimes.co.kr/www/news/nation/2016/01/116_195179.html.

  • “Ex-Joint Chiefs of Staff chief gets jail term for bribery,” Yonhap News Agency, Nov. 18, 2016, http://english.yonhapnews.co.kr/national/2016/11/18/63/0301000000AEN20161118005100315F.html.

  • 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.