Hanwha, HD Hyundai Heavy Industries Withdraw Complaints... Kim Dong-kwan and Jeong Gi-seon Confirm 'Cooperation'

"Cooperation to Expand Marine Defense Export"
Expectations to Resolve Conflict in Destroyer Project

Hanwha Ocean has abruptly withdrawn its complaint requesting an investigation into the involvement of executives in the military secrets leak incident at HD Hyundai Heavy Industries. It is reported that there was a mutual understanding between Kim Dong-kwan, Vice Chairman of Hanwha Group, and Jung Ki-sun, Senior Vice Chairman of HD Hyundai Group, on the need for cooperation to strengthen competitiveness in the domestic shipbuilding business, which recently received favorable conditions in the defense sector.

If the conflict between the two companies is resolved, the long-delayed next-generation Aegis destroyer (KDDX) project is expected to resume at a rapid pace.

On the morning of the 22nd, Hanwha Ocean visited the National Police Agency's National Investigation Headquarters and announced that it had submitted a withdrawal of complaint. Hanwha Ocean had filed a complaint with the police in March, requesting an investigation into the involvement of executives in the military secrets leak incident at HD Hyundai Heavy Industries.

In November of last year, some employees of HD Hyundai Heavy Industries were found guilty of violating the Military Secrets Protection Act by secretly acquiring military secrets and sharing them through the company's internal network. The Defense Acquisition Program Administration decided not to restrict HD Hyundai Heavy Industries' eligibility to participate in the KDDX project bidding, citing that there was no confirmation of violations of the integrity pledge involving the company's CEO or executives, which led to the filing of the complaint.

The company stated, "We judged that withdrawing the complaint to establish a stepping stone for mutual complementarity and cooperation is in the national interest at this point, to secure maritime security through the timely operational deployment of the KDDX and to expand maritime defense exports as the world focuses on South Korea's shipbuilding industry."

It added, "We will actively cooperate with the government's one-team strategy, and at a time when China is aggressively investing to encroach on the global market, mutual cooperation between companies is necessary to strengthen the overall competitiveness of the domestic shipbuilding industry. We have decided to abruptly withdraw the complaint as a magnanimous measure to build trust among domestic companies."

It is reported that Vice Chairman Kim and Senior Vice Chairman Jung, who have a close personal relationship, agreed on the need to avoid competition between the two companies and to cooperate. A Hanwha Group official said, "We understand that the two recently exchanged opinions," adding, "It is a proactive proposal for harmony aimed at cooperation."

HD Hyundai Heavy Industries and Hanwha Ocean are regarded as the biggest beneficiaries of Korea-US defense industry cooperation ahead of the inauguration of the second Trump administration. Since President-elect Trump himself emphasized Korea's help and cooperation in the U.S. shipbuilding industry, it is necessary to consolidate the two companies' ship technology and research and development (R&D) capabilities.

Since signing the Maintenance, Repair, and Overhaul (MRO) agreement for U.S. Navy ship maintenance in July, Hanwha Ocean succeeded in securing its first order at the end of August and won a second order on the 12th of last month. HD Hyundai Heavy Industries also signed the MSRA and is known to plan to actively participate in the project starting next year.

If the two companies enter a reconciliation mode, the selection process for the KDDX project currently underway at the Defense Acquisition Program Administration is expected to accelerate. Hanwha Ocean has expressed its intention to sincerely participate in the due diligence evaluation and on-site inspection according to the defense contractor designation procedure conducted by the Ministry of Trade, Industry and Energy. A Hanwha Ocean official said, "We hope to accept the transparent and fair evaluation results from the Defense Acquisition Program Administration and other government bodies and that this will serve as an opportunity for mutual cooperation."