Korea Aerospace Industries Allegedly Earns Nearly $48 Million From Falsified Development Expenses
The Korea Aerospace Industries (KAI) of South Korea reportedly earned unmerited profits of at least $47.9 million through falsified development expenses for manufacturing a fleet of helicopters for Seoul's military, reported UPI on Monday.
The Board of Audit confirmed the fraudulent declaration of development costs in order for two suspected masterminds in the case to take home nearly $48 million, while KAI acted as the intermediary between the Defense Acquisition Program Administration (DAPA) of Seoul and 22 domestic and foreign contractors.
The Korean Space Industries manufactured Surion helicopters, which are light utility twin-engine rotorcrafts that are capable of carrying nine people in combat at a speed of 162 miles per hour for at least two hours. It is designed to assist in troop assault, tactical lift, search-and-rescue operations and liaison and medical evacuation.
"Development projects of Surion variants have attracted attention from overseas markets, including the emerging countries in Southeast Asia and Latin America," said the Korea Aerospace Industries.
It has deployed 34 helicopters so far and South Korea has spent almost $1.14 billion to invest on a project that is set to continue production of the KAI Surion helicopters until 2023.
According to Korea Herald on Tuesday, the Board of Audit and Inspection wanted to perform a prosecution inspection for the alleged falsified development expenses. KAI, however, denies the allegations.
"Surion-related payments have been made legitimately and transparently in accordance with an agreement between DAPA and KAI," claimed the aircraft maker in a press release, which also added it would take legal actions as countermeasure.
The Board of Audit inferred KAI made up a cost estimate of $20.1 million worth of investment from DAPA, while seemingly in the works of developing helicopters when the goods and services were actually being obtained from 20 other firms.
An investigation on two Korean Aerospace Industries employees responsible for the DAPA contract is already requested by the Seoul's editors as the semi-private agency could earn an additional $21.3 million worth of unjust profits moving forward.
The KAI employee and the employee's brother-in-law allegedly cooked up an illegal scheme of outsourcing overseas subcontractors and raising development costs to pocket the profits.