Based on final guilty verdicts for HD Hyundai Heavy Industries employees on charges of leaking military secrets, the Defense Acquisition Program Administration (DAPA) decided to apply security demerits to the company through next year. Accordingly, the security demerits for HD Hyundai Heavy Industries will apply to all bidding processes through December next year.
Kim Ju-cheol, DAPA Spokesperson, said at a Ministry of National Defense regular briefing on the 30th, "We had planned to treat (HD Hyundai Heavy Industries') security incident as a single case and apply security demerits through November this year, but after a legal review we determined the cases should be separated, so we decided to apply them through December next year."
Nine employees of HD Hyundai Heavy Industries were indicted in 2014 on charges of leaking military secrets, including materials related to the KDDX. Of them, eight had their guilty verdicts finalized in November 2022, and the remaining one received a final guilty verdict in December 2023.
DAPA, which had judged the two rulings as a single case, had planned to impose a sanction of 1.8 security demerit points on HD Hyundai Heavy Industries through November this year. However, based on an internal legal review that the types or forms of the secrets leaked by the employees of HD Hyundai Heavy Industries were different and that the two rulings should be viewed separately, it decided to apply the security demerits separately as well.
The period for applying security demerits is three years from the finalization of the sentence. Accordingly, HD Hyundai Heavy Industries will receive a deduction of 1.8 points through November this year, and 1.2 points from then through December next year. A DAPA official said, "We clarified the period for applying security demerits before the demerit period expired."
It is unclear whether the demerit measure will affect the award of the KDDX detailed design and lead ship (Ship No. 1) project. That is because DAPA has not yet decided on the project method. If it proceeds as a competitive bid rather than a negotiated contract, HD Hyundai Heavy Industries will begin with the security demerits.
HD Hyundai Heavy Industries expressed strong regret over DAPA's measure. HD Hyundai Heavy Industries said, "With the decision on how to proceed with the KDDX project imminent, we cannot help but harbor strong doubts about the background of such a decision," adding, "We make it clear that DAPA's act is a serious act of damaging trust in a company that has taken responsibility for and devoted itself to the defense industry, the core backbone of national security, and a serious act of damaging the national interest."
It continued, "HD Hyundai Heavy Industries will strongly object and request a review, recognizing the current situation as a 'tilted playing field' where fair competition is impossible," and emphasized, "We will take all possible legal actions."