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South Korea: General Dynamics Denies Bribery Allegations

by John MintzWashington Post
October 26th, 1995

A South Korean legislator alleged yesterday that General Dynamics Corp. paid former president Roh Tae Woo at least $ 100 million in 1991 in a successful effort to persuade the South Korean military to buy the company's F-16 fighters. The Falls Church-based company strenuously denied the allegation.

Kang Soo Rim, an ex-prosecutor who is a member of the opposition Democratic Party, made the assertion in a speech before the South Korean parliament, but didn't provide the source of his information.

The allegations are part of a wider Korean political scandal exploding over the last several days and centering on Roh, who was president from 1988 to 1993. Roh's former top security chief, Lee Hyon-Woo, said on Sunday that he managed secret bank accounts for Roh worth $ 47 million.

Opposition politicians have alleged over the last week that Roh has controlled as much as $ 522 million in various slush funds, much of it provided by U.S. defense firms and European companies that did business with the Roh government. The prosecutor-general's office, acting on information provided by a former presidential accountant, is looking into numerous bank accounts supposedly controlled by Roh.

Roh has declined comment.

In 1991, General Dynamics won a $ 6 billion contract to sell the South Korean Air Force 120 F-16 fighters, after persuading government officials to reverse their previous decision to buy F/A-18s made by the firm's arch rival, McDonnell Douglas Corp. Many South Korean Air Force officials preferred the F-18.

The reversal has prompted continual allegations of undue influence, but Kang Soo Rim's assertions are more specific than those in the past, at least in the amount of money.

"We absolutely deny these allegations," General Dynamics spokeswoman Norine Lyons said yesterday. "It's maddening and frustrating" that they've resurfaced.

Lockheed Martin Corp., which two years ago bought the Texas-based General Dynamics division that makes F-16s, said yesterday in a statement that the Bethesda-based company is "absolutely certain that its predecessor conducted business in a fair and legitimate manner during the F-16 recompetition. . . . These allegations have no foundation."

Both firms cited a 1991 review of the matter by the General Accounting Office, which said "cost was a primary factor" in the F-16's victory. But the probe was cursory, and GAO staff members never visited Korea.

U.S. industry executives have found the suspicions about payoffs farfetched, in part because of the sums of money alleged to have changed hands. Moreover, they note, General Dynamics' chairman at the time was Stanley Pace, whom they call an extreme stickler on ethical matters.

The administration of President Kim Young Sam has launched several corruption investigations, some focusing on the $ 21 billion worth of Western weapons the South Korean government bought starting in 1974. However, critics have questioned how strongly Kim's government will pursue the case against Roh. A one-time dissident, Kim joined Roh's ruling party and succeeded him as president.

The latest scandals have fed violent protests by radical students demanding Roh's indictment. South Korea's ruling party chairman called for Roh to apologize and enter internal exile because of the allegations.



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