Ssangyong Motor Researchers Busted for Tech Leaks

Seven senior researchers at Ssangyong Motor were indicted yesterday for leaking core technology for building hybrid cars to its Chinese parent company, Shanghai Automotive Industry Corp.

Korean experts urged measures to prevent foreign companies from acquiring Korean businesses to take their technologies.

The Seoul Central Prosecutors’ Office said it suspended the indictment of a former senior Chinese researcher at Ssangyong on the charge of ordering the Korean carmaker to hand over its key technologies for diesel-powered hybrid cars developed with government support. This was to make Beijing extradite the researcher to Seoul.

In addition, prosecutors indicted without detention seven Ssangyong senior researchers from Korea on the charge of leaking technologies to the Chinese automaker.

According to the prosecution, the seven leaked the “source code” for the hydraulic control unit of a hybrid vehicle to the Chinese company upon request from the Chinese senior researcher in July 2006. In the process, they signed no technology transfer contracts with Shanghai Automotive or reported to Ssangyong’s CEO or board of directors.

The hydraulic control unit controls the engine and transmission of a hybrid vehicle to optimize fuel efficiency and functions. In 2006, Ssangyong developed the technology jointly with German company FEV with 5.6 billion won (4.84 million U.S. dollars) in state funding support.

In August 2007, Korea’s state committee on the protection of industrial technology designated the technology as a “core state technologies” managed by the Knowledge Economy Ministry.

In addition, the Korean researchers also handed over key information on the diesel engine and power transmission technologies for Kyron, Ssangyong’s main sport utility vehicle model, via e-mail in June 2007. In April 2005, they illegally obtained Hyundai Motor’s hybrid design to make a Ssangyong hybrid prototype.

“It can be seen as illegal for one company to transfer the technology of another that it acquired without a proper contract even if the former acquired the latter in a legal manner,” a prosecutor said.

Ssangyong said the leakage will not significantly affect the troubled automaker’s revival plan. The company said in a news release that the materials handed over to Shanghai Automotive were mere explanations about certain functions of the hydraulic control unit to help the Chinese parent company understand hybrid technology.

Ssangyong added that key technological features were not handed over to the Chinese company, and that most materials provided to Shanghai Automotive was what had been unveiled on the Internet or academic journals.

On the alleged leakage of the diesel engine, Ssangyong said the information was no secret because it did not involve the design or manufacturing method.

The Korean carmaker said the indictment will not affect its corporate revival procedure because Shanghai Automotive approved of Ssangyong’s revival plan last week.

sukim@donga.com ceric@donga.com