Did an Executive Also Involve in 'HD Hyundai Heavy Industries Stealing Confidential Information'? [Yang Nak-gyu's Defence Club]

Hanwha Ocean Files KDDX Information Disclosure Request with Prosecutors
Investigation Results May Determine Executive Involvement

Hanwha Ocean has filed a request for information disclosure with the prosecution regarding the investigation records of the next-generation destroyer (KDDX). This is to examine whether HD Hyundai Heavy Industries was involved in leaking military secrets.

[Image source=Yonhap News]

According to a government official on the 24th, the Defense Counterintelligence Command investigated in 2018 after discovering that HD Hyundai Heavy Industries had leaked military secrets and stored them on an internal server (NAS). The leaked secrets were 'secretly filmed' by HD Hyundai Heavy Industries employees at the Navy Headquarters, Defense Acquisition Program Administration, and Defense Technology Quality Institute. Ultimately, nine employees belonging to HD Hyundai Heavy Industries' Special Ship Division were indicted for violating the Military Secrets Protection Act and all were found guilty.

The core focus of the intelligence agency's investigation at the time was the theft of military secrets. The involvement of HD Hyundai Heavy Industries executives was excluded. However, if executives were involved, the designation of the defense contractor could be revoked. According to the public evidence list from the military court, HD Hyundai Heavy Industries signed a contract with a server management company. HD Hyundai Heavy Industries managed illegally obtained confidential materials on an unauthorized internal server (NAS). They even prepared manuals for responding to raids and security audits. The business trip reports of employees included details about the theft of military secrets, and executives inevitably had knowledge of the server management. There is a possibility of executive reporting or approval.

Defense companies must submit a pledge of integrity to the Defense Acquisition Program Administration when bidding for projects. HD Hyundai Heavy Industries submitted a pledge of integrity related to the ongoing KDDX project. Violation of the integrity pledge can lead to cancellation of the defense contractor designation.

After being convicted for leaking secrets, HD Hyundai Heavy Industries restricted the disclosure of the case verdict so that third parties could not view it. This was to make it difficult for relevant authorities to impose sanctions such as disqualification or contract cancellation. The Defense Acquisition Program Administration, which obtained the verdict around October last year, held a contract review committee in December to discuss measures such as restricting bidding participation qualifications, but deferred sanctions citing the need for further review.

Investigators are also looking into whether the Defense Acquisition Program Administration provided preferential treatment. Last month, a forced investigation was conducted on former Defense Acquisition Program Administration head Wang Jeong-hong. He is suspected of giving preferential treatment to HD Hyundai Heavy Industries. Eight months before the Defense Acquisition Program Administration announced the KDDX basic design bid in September 2019, a regulation that penalized companies causing security incidents was removed. At that time, Hyundai Heavy Industries was under investigation for allegedly leaking design plans submitted by Daewoo Shipbuilding & Marine Engineering to the Defense Acquisition Program Administration. If the regulation had not been removed, they could have been penalized.