First Joint Investigation with US Department of Justice Based on MOU
Twelve Company Officials and Two Corporations Indicted Without Detention
The prosecution has indicted 12 company officials and 2 corporations in connection with a bid-rigging case involving the procurement of facilities and supplies for US Forces Korea, amounting to approximately 25.5 billion won. This case marks the first instance in which South Korean prosecutors have directly investigated such a matter through cooperation with the US Department of Justice’s Antitrust Division.
On May 9, the Fair Trade Investigation Division of the Seoul Central District Prosecutors' Office, led by Chief Prosecutor Kim Yongsik, announced that it had indicted, without detention, nine representatives of domestic subcontractors and three officials from a bidding agency on charges including violations of the Fair Trade Act and obstruction of bidding. In addition, subcontractor Company A and US-based bidding agency Company L were also indicted for violating the Fair Trade Act.
From November last year to April this year, the prosecution conducted searches and seizures at a total of 13 locations and questioned around 40 people as witnesses. The US Department of Justice previously indicted two company representatives in a Texas court in 2022, securing guilty verdicts, and in March last year, indicted Company A and its representative, with the trial still ongoing.
According to the prosecution, from 2019 to 2023, the accused are suspected of colluding in 229 bids for subcontracted services related to the management of US Forces Korea hospital facilities and the procurement of supplies, commissioned by the US Army Corps of Engineers (USACE) and the Defense Logistics Agency (DLA). The total value of these bids was approximately 17.5 million US dollars (25.5 billion won).
The collusion was carried out by having the designated winning company request that “dummy companies,” posing as competitors, prepare quotations, and by drafting and submitting documents on their behalf. In some cases, the bidding agency only notified certain companies, pre-selected by the intended winning bidder, of site inspections and selectively shared bidding information, thereby controlling the bidding process.
Three employees of Company L and its Korea office were also found to have actively participated in these unfair joint activities. In particular, Kim, the head of Company L’s Korea office, was found to have manipulated bid amounts to ensure that certain companies would win, thereby obstructing the bidding process.
This investigation is the first joint case under the “Memorandum of Understanding on Criminal Cartel Enforcement Cooperation” signed between South Korea and the United States in 2020. After reviewing the case, the US Department of Justice’s Antitrust Division referred related materials to the prosecution, which then launched its investigation. The prosecution stated that the investigative teams from both countries shared evidence through email, video conferences, and international criminal justice cooperation, conducting parallel investigations.
The prosecution described this case as “a very serious matter directly linked to the security and national interests of the Republic of Korea, as it constitutes a crime against US military bases stationed in the country under the ROK-US Mutual Defense Treaty.” Currently, about 28,500 US troops are stationed in South Korea, with Camp Humphreys in Pyeongtaek being the largest US military base in the world. The prosecution believes that the accused repeatedly engaged in collusion at US military bases nationwide over several years, thereby obtaining enormous illicit gains.
A prosecution official stated, “We will continue to maintain a robust system of investigative cooperation between Korea and the United States, and will respond strictly to cross-border unfair practices to establish a fair trading order.”
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