LIG D&A chief denies company involvement in DAPA bribery case

Shin Ik-hyun, president of LIG D&A, appeared before the National Assembly's national audit Monday and denied allegations that the company was institutionally involved in a bribery case involving a Defense Acquisition Program Administration (DAPA) civil servant. He nonetheless bowed his head and said he felt a deep sense of responsibility as chief executive for the incident.

Shin appeared as a witness at the National Assembly Defense Committee's comprehensive audit. When Reform Party lawmaker Cheon Ha-ram asked whether the company had been unaware of the 300 million won ($227,000) — noting that LIG was no small operation and that raising such a sum was no simple matter — Shin said it was "structurally impossible" for the company to arrange 300 million won through its internal procedures.

Asked whether he had ever been directly investigated in connection with the bribery case, Shin said he had not. Cheon pushed back, saying, "But there is someone who did receive the money, isn't there?"

Also coming under scrutiny Monday was an explanatory document LIG D&A submitted to Cheon's office. Prosecutors believe bribe money was mixed into payments made to subcontractors. When asked why those payments had been increased nine times, LIG D&A reportedly told Cheon's office the increases were due to requests from the military unit that had required the work.

Cheon disputed that account, saying DAPA had responded in writing that the military had never requested additional work and that the payment increases were not the result of any such demand. "Is the CEO lying, or is DAPA lying?" he asked.

Shin said the briefings he had received told a different story and offered to submit a written response.

Cheon said it appeared LIG had been using the military as a pretext when no such request had been made. "There is no choice but to suspect that the money raised by lying and using the military as cover ultimately flowed into bribes," he said.

The exchange also turned to the evaluation scores at the center of the case. LIG D&A has maintained that all six projects assessed by the civil servant in question fell within areas where the company held overwhelming competitive advantages, and that there was therefore no reason to seek any improper influence.

Cheon rejected that argument, saying there were numerous cases in which removing that one civil servant's scores would have changed the top-ranked bidder, and that many of the so-called dominant victories had been decided by a single point. He added that in evaluations where the civil servant served on the panel, LIG went three for three, but in evaluations where he did not, the company's record was four wins and eight losses. "Can you still say there is no causal link between the bribes and the evaluation results?" he asked. Shin said only that there was "no way to verify how that civil servant assigned his scores."

People Power Party lawmaker Yoo Yong-won then asked whether Shin's position was that the case had nothing to do with LIG D&A. Shin said the two individuals who had been indicted were maintaining their innocence and that the truth would be determined at trial.

When pressed on his moral responsibility — given that those on trial were executives who had served under him — Shin said he took the matter gravely and felt a deep sense of responsibility as chief executive for what had occurred.

Shin also outlined steps taken to prevent a recurrence. He said the company had formed a task force immediately after the indictments to review its entire internal processes, had strengthened its legal response framework, and had retained a global law firm to bring its compliance standards in line with international norms. He added that a new compliance audit office had been established to tighten internal controls.

Earlier, the Suwon District Prosecutors Office indicted a Grade-5 DAPA civil servant and a LIG D&A vice president on detention-based charges, and separately indicted a managing director without detention, alleging the civil servant had received a total of 460 million won in benefits — including 320 million won in cash and subcontracting referral rights worth 2.2 billion won — in exchange for awarding favorable scores to LIG D&A across six defense procurement evaluations worth a combined 91.5 billion won ($69.1 million). At the first hearing last month, the civil servant accused of accepting the bribes and those alleged to have participated in laundering the funds acknowledged all charges.

DAPA convened a defense procurement contract review committee Tuesday and voted to impose a 24-month ban on LIG D&A's eligibility to participate in bidding — the harshest penalty available under the State Contracts Act. LIG D&A has said it intends to seek an injunction to suspend enforcement and file an administrative lawsuit.