'1.2 Billion Defense Research Contract' Researcher Caught Redirecting Funds to Girlfriend Who Is a Childcare Teacher

Researcher at Defense Technology Promotion Institute,
caught setting up a company under girlfriend's name for 'self-contracting'

An employee of the Defense Technology Promotion Research Institute (DTPI) under the Defense Acquisition Program Administration (DAPA) was caught giving an outsourced contract worth 1.2 billion KRW to his girlfriend, who used to be a childcare teacher. It is known that the researcher planned and executed a 'self-contracting' scheme by creating a company with his girlfriend and an acquaintance.

Democratic Party of Korea lawmaker Song Gap-seok is questioning at the National Assembly's National Defense Committee's audit of the Defense Acquisition Program Administration held on the 16th.
[Photo by Yonhap News]

According to the 'Investigation Report on Fraudulent Activities of Outsourced Service Providers (Subcontractors)' disclosed by Song Gap-seok, a member of the National Assembly Defense Committee from the Democratic Party, Researcher A, who was in charge of weapon system modification development at DTPI, selected two companies to lead related projects in July last year. These companies received a total of 5.3 billion KRW in government support funds.

These companies needed to find external firms to conduct weapon system simulation tests. Knowing this, Researcher A planned to create a company and secure the contract himself. His acquaintance, Professor B, and his girlfriend, Ms. C, joined the plan.

Researcher A first had his girlfriend establish a company with seed money of 5 million KRW, while he took charge of the actual operations.

Although this company lacked the capability to perform weapon system simulations, it succeeded in securing contracts worth 600 million KRW each from the two companies managed by Researcher A through private contracts. Researcher A was involved in everything from selecting the companies to drafting the contracts.

The total contract amount was 1.2 billion KRW, of which 700 million KRW was paid as an advance. However, the government funds paid were not used for the actual service execution at all.

Ms. C, who was listed as the company representative, used this money to purchase an officetel worth 212 million KRW and paid herself a monthly salary of 10 million KRW, which she shared with her boyfriend, Researcher A.

Additionally, by promoting the company as a women-owned business, they fabricated the hiring of employees on paper and fraudulently received 4.8 million KRW in 'Youth Job Leap Incentives' from the Ministry of Employment and Labor.

Their scheme, which nearly became a perfect crime, was uncovered by an external accounting firm auditing DTPI’s project expenditure records.

The audit revealed that they were incapable of actually performing the contracted services, and the project was planned to be carried out in a research lab at a national university in Busan where Professor B was affiliated.

Following a large-scale audit by DAPA, Researcher A was dismissed last month, and DTPI reported the group to the Gyeongnam Provincial Police Agency on charges including violation of the Conflict of Interest Prevention Act, fraud, and false entries in official documents.

The Defense Technology Promotion Research Institute (DTPI) was established in 2021 to research defense technology policies and strategies and to innovate the defense R&D system through weapon system modifications, with an annual budget reaching 1 trillion KRW.

Defense Committee member Song Gap-seok pointed out, "If DTPI, which manages a budget of up to 1 trillion KRW, regards this incident as merely an individual's deviation and fails to improve its lax system, doubts about DTPI’s function and existence itself may arise."

He added, "It is necessary to supplement and improve the weak management system and ensure that DTPI’s core tasks are properly carried out in line with the scale and importance of its project budget through organizational restructuring and regular staff recruitment."

This content was produced with the assistance of AI translation services.