Judiciary must reaffirm its independence amid political storm

Prosecutors in South Korea have uncovered an $18.2 million bid-rigging scheme involving subcontracted U.S. military supplies, marking the first joint criminal antitrust investigation carried out under a memorandum of understanding between South Korea and the United States.

On May 8, the Fair Trade Investigation Division of the Seoul Central District Prosecutors’ Office, led by chief prosecutor Kim Yong-sik, indicted nine individuals, including a man surnamed Kim, who represent 11 subcontractor companies, on charges of violating South Korea’s Fair Trade Act. Three others were also indicted, including officials from a U.S.-based company, its Korean branch, and a domestic firm acting as subcontractors.

Prosecutors said that from January 2019 to November 2023, the defendants colluded during the bidding process for subcontracted services related to the maintenance, supply, and installation of equipment for U.S. Forces Korea. These contracts were issued by the U.S. Army Corps of Engineers (USACE) and the Defense Logistics Agency (DLA). The collusion scheme involved designating pre-arranged bid winners while other companies submitted fake estimates to create the appearance of competition.

The investigation began when the U.S. Department of Justice, which had been probing the case, referred it to Korean prosecutors last year after identifying the involvement of South Korean entities. While the DOJ initially flagged seven suspected cases of collusion, Korean prosecutors later uncovered an additional 230 instances.

“This MOU has opened a direct channel,” Kim said at a briefing. “Without this channel, the investigation would not have proceeded smoothly. We will continue strengthening the joint investigation framework between South Korea and the United States and respond firmly to cross-border unfair practices to ensure a fair trade environment without blind spots.”