Following an eight-month investigation that ended in July, a South Korean joint task force on corruption in defense contracts reported that W980.9 billion ($867.7 million at current exchange rates) worth of defense contracts in South Korea have been affected by corruption in the last seven years.
This amounts to a full 8.9 percent of this year’s Defense Capability Improvement Cost, which totals W11.14 trillion. But the task force only investigated corruption in the contracting and delivery process. It did not examine the major venues of defense contract corruption. Significant corruption occurs in the supply decision in the policy setting stage, when purchasing decisions on certain weapons are made. Any corrupt, but still competent, arms dealer will focus his lobbying on high-ranking decision makers of the supply chain.
It takes mere administrative efforts to get through the process of contracting and delivery. For example, let’s consider a case involving the Electronic Warfare Training System (EWTS). An arms dealer purchased W50 billion worth of EWTS from a Turkish manufacturer and sold it to the South Korean Air Force for W100 billion, pocketing W50 billion for himself.
South Korea had originally intended to develop this system itself, but an unnamed high-ranking official intervened and altered the domestic development policy and instead decided to purchase the system from abroad. He then either aided or allowed a new contract to be made with the arms dealer in question. The task force’s investigation, however, only reported the embezzlement of the W50 billion and didn’t discuss the policy shift from domestic development to purchasing from abroad.
Ninety percent of defense contract corruption occurs in the supply decision itself. The task force was forced to admit that they “could not investigate the weapons supply decision as it was beyond our investigation ability” when they presented their findings. Only “unlucky” weapons were investigated, those with which the mere administrative process of contracting and delivery failed, and mistakenly revealed a malfunction with the purchased weapons.
If corruption does exist in the supply decision, or if the decisions were poorly made, the sheer magnitude of it would be astronomical. Huge weapons purchases in South Korea have their origins in aggravated public fear due to an emphasis on uncertain threats from North Korea. Let’s look at a major example. South Korea has a nine-stage defense scheme of combined forces – Air Force, Navy and Army in a series of sequential actions against a North Korean Special Forces invasion of the South Korean coastal line on high-speed hovercraft.
One day, the media suddenly focuses on the fact that North Korean Special Forces number 200,000 men. The aggravated fear that arose from this scenario resulted in the South Korean Army’s purchase of W3 trillion worth of US Apache helicopters. Yet, in reality, there is no country in the world capable of invading an enemy’s rear area with 200,000 special forces just in a few hours. The media highlighted simply the number of special forces without mentioning any transportation means of invasion.
In the meantime, the South Korean Air Force underscored the fact that North’s long range artillery, which used to be in front of mountain ridges aiming south, have been moved to the back side of the mountain and located in a tunnel. They wanted to highlight that now it is impossible to strike the North’s long range artillery from the front; destroying them is only possible from the rear of the mountain ridges, after covertly penetrating enemy territory. As a result, they argued for the purchase of the not-yet-developed F-35 stealth fighter.
The repercussions are severe, as we are now witnessing. The F-15SE was chosen as South Korea’s next-generation fighter, the F-X, in 2013. Later that year in September, the previous decision was changed to the F-35, without any further discussions. The F-35 was weaker a candidate than the F-15SE in almost every aspect except for stealth capability. Its arms capability, speed and range were weak, and its development was incomplete. But the supply decision was made to purchase 40 fighters for W7.3 trillion despite its weak performance, the fact that its development is not yet complete, its high price, and the unfavorable technology transfer conditions.
The purchase was rationalized on the sole fact that North Korea’s 40-years-old artillery moved from the front of the mountain ridges to their back. This particular deal was the focus of a parliamentary inspection of the administration in South Korea this October.
Take yet another case. Last year March, North Korea’s undersized drone appeared over the capital Seoul, and Baengnyeongdo, one of the northernmost islands in South Korea. At first, the military didn’t consider it to be a threat. After all, it was a crude drone that did not seem to be capable of carrying even five kilograms of bombs. But the media began to focus attention on the drone. It spread the wild fantasy that this 15-kilogram drone could carry 20 to 30 kilograms of bombs and even biochemical weapons.
The Blue House came around to these stories, and the military followed suit, changing their classification of the situation to a “severe threat.” This led to the supply decision to acquire low altitude drone detection radar, a system that no country in the world has deployed.