"[Exclusive] Swedish Firm Probed Over Fighter Development Plan

 

A model of the KF-X fighter jet

By Jung Sung-ki


Staff Reporter





Saab, a Swedish defense firm, is being investigated here over alleged
illegal lobbying of a defense research institute affiliated with the
National Assembly regarding a South Korean fighter development program,
sources said Monday.





Prosecutors recently raided both the firm's branch office and the
headquarters of the Security Management Institute (SMI) in southern
Seoul to seize documents and computer files as part of its three-month
investigation into their alleged connection, the sources said.





Prosecutors have also traced the bank accounts of Saab officials and
the SMI president to uncover alleged financial transactions between the
two sides, they said.





SMI has served as an influential research agency regarding major South
Korean arms acquisition and development programs since it was
established as an advisory agency to the Assembly in 2005.





It was also designated by the Defense Acquisition Program
Administration last October as an agency for studying weapons programs,
cost analyses and defense technology development plans.





"The prosecution has almost completed its investigation of Saab and SMI
and is closely analyzing confiscated material," a source told The Korea
Times on condition of anonymity.





"It is a rare and intensive probe into a foreign defense firm and is
expected to affect future arms improvement programs involving foreign
manufacturers, depending on the results," he said.





Prosecutors said SMI was suspected of having offered classified
information on the KF-X indigenous fighter development program to Saab
or written up parliamentary documents on the KF-X partnership in favor
of the Swedish company, in return for compensation.





A Saab official declined to comment on the issue, while an SMI
representative denied the allegation and argued the investigation was
merely a routine inspection of the parliamentary advisory institute.





"This incident may deal a blow to Saab in its ongoing and future
businesses," the source said, adding the firm is considering cancelling
its participation in the Seoul Air Show slated for Oct. 20 to 25.





In a related move, the Defense Security Command investigated the
state-funded Agency for Defense Development earlier this year over a
possible information leak to Saab, which was conducting a joint
feasibility study on key arms development programs.





Saab has engaged in various weapons procurement projects in the
country, such as the integration of a naval radar system and the export
of its artillery-detecting radar system.





The KF-X project, aimed at creating an indigenous combat aircraft in
partnership with a foreign aircraft giant to replace the Air Force's
older F-4s and F-5s, has drawn proposals from major Western fighter
houses.





Saab has been among the most active bidders by offering a new design
for a super-cruising stealth fighter. It also asked South Korea to join
its Gripen next-generation program to forge a broader fighter
development partnership.





Other foreign manufactures that have shown interest in the KF-X include
Boeing, Lockheed Martin and Eurofighter. The KF-X has been
controversial, however, since many defense analysts see it as unviable
economically and technically.





The KF-X was cut again in next year's defense budget proposals
submitted by the Ministry of National Defense earlier this month.





The Weapon Systems Concept Development and Application Research Center
of Konkuk University commissioned by the government to examine the
feasibility of the KF-X is known to have suggested lower operational
requirements for the new fighter jet.





In its interim report revealed earlier this year, the center
recommended a plan to produce about 250 F-16-class fighters after 2010
with the help of foreign firms.





The center asked foreign firms about their views on the per-plane cost
estimate of $50 million, as well as budget-sharing ideas and technology
transfer.

In a 2007 feasibility study by a local economic policy think tank, the
KF-X project was assessed as unsound economically as it would cost at
least $10 billion, but would reap only $3 billion in economic benefits."