HD Hyundai Heavy Industries Granted Immunity for Leaking Military Secrets

DAPA "Unclear Facts on Executive Integrity Pledge Violations"

The Defense Acquisition Program Administration (DAPA) has decided not to restrict HD Hyundai Heavy Industries' eligibility to participate in bids. This is expected to spark controversy over whether it grants a pardon to the company that leaked military secrets.

Kim Dae-sik, Chief of the Special Ship Planning Department at Daewoo Shipbuilding & Marine Engineering, is submitting a national audit request in front of the Board of Audit and Inspection in Jongno-gu, Seoul, on the 19th, regarding the legality of the selection process and progress of the Korean next-generation destroyer (KDDX) project currently underway by HD Hyundai Heavy Industries. This audit request was made through the voluntary participation of Daewoo Shipbuilding & Marine Engineering employees. Photo by Kang Jin-hyung aymsdream@

DAPA announced on the 27th that at the contract review meeting held in the afternoon, the sanction review against HD Hyundai Heavy Industries as a fraudulent company was resolved as an 'administrative guidance.'

The reason for limiting the penalty to administrative guidance despite the leakage of military secrets is based on Article 59 of the Defense Acquisition Program Act, according to DAPA's position. They stated that since there is no objective evidence confirming the involvement of representatives or executives, which is a prerequisite for violating the integrity pledge, they cannot impose sanctions.

If HD Hyundai Heavy Industries were to be sanctioned with a bid participation restriction, their participation in the construction project of the Korean next-generation destroyer (KDDX), for which they won the basic design contract, would have been restricted. Nine employees of HD Hyundai Heavy Industries were convicted last November for violating the Military Secrets Protection Act by detecting, collecting, and leaking military secrets, receiving prison sentences of 1 to 2 years and probation of 2 to 3 years. These nine employees illegally obtained 12 military secret documents related to KDDX, prepared by Daewoo Shipbuilding & Marine Engineering (now Hanwha Ocean), over about three years from October 2012 to November 2015, and shared them through the company's internal network.

The KDDX project is a plan to build six 6,000-ton-class Korean next-generation destroyers by 2030, with a budget of 7.8 trillion won. The project proceeds in the order of ▲concept design ▲basic design ▲detailed design and initial ship construction ▲follow-up ship construction. In this project, Hanwha Ocean secured the concept design, and HD Hyundai Heavy Industries won the basic design contract.

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