HD Hyundai Heavy Industries (HHI), accused of leaking military secrets, will not receive sanctions, so it will be able to continue to bid in winning maritime defense projects. As a result, the company will be able to take part in a tender for the construction of the Korea Destroyer KDDX, which will cost a total of 8 trillion won.
The Defense Acquisition Program Administration (DAPA) of Korea said that a decision to sanction HD HHI was resolved as an administrative guidance at a contract review council meeting held on Feb. 27.
DAPA said that the reason for the decision was that a violation of the Military Secrets Protection Act does not constitute fraudulent acts such as unauthorized construction that differs from design and monetary damage in the execution of the contract under Article 27 (1-1) and (1-4) of the National Contract Act, and also cannot be sanctioned due to the passage of the expiration period. “A sanction under Article 59 of the DAPA Act cannot be imposed because the involvement of presidents or executives, which is the premise of a violation of an integrity pledge, has not been objectively checked based on facts,” the DAPA added.
Earlier, nine HD HHI employees were convicted of violating the Military Secrets Protection Act by detecting, collecting, and disclosing military secrets in November 2023. They were sentenced to one to two years in prison and two to three years' probation. They were accused of illegally acquiring 12 military secrets including data related to the KDDX prepared by Hanwha Ocean (then Daewoo Shipbuilding & Marine Engineering) over a three-year period from 2012 to 2015 and sharing them through the company’s internal network.
HD HHI was already facing security-related penalties of receiving fewer points for the leak of military secrets in taking part in tenders held by DAPA. If HD HHI gets punished by the sanction, it will be unable to participate in tenders for naval ship projects for a certain period of time. Therefore, much attention was paid to what decision DAPA would make.
“We respect DAPA’s decision and will do our best to contribute to the growth of the Korean defense industry through the growth of the Korean battleship industry and the expansion of Korean battle ship exports,” HD HHI said in response.
The outcome has bewildered Hanwha Ocean. “HD HHI’s theft of the secrets is considered gross negligence that shakes the foundation of Korean defense, and we once again call for a review and an audit of the case and a police investigation into it,” a Hanwha Ocean official said.