03 August 2017

News Story: Prosecution widens probe into KAI over suspected accounting fraud

KUH-1 Surion Helicopter
SEOUL, Aug. 2 (Yonhap) -- Prosecutors said Wednesday they have launched an investigation into suspicions of accounting fraud at South Korea's sole aircraft manufacturer, Korea Aerospace Industries Co. (KAI), with its top executives already under probe for cost manipulation and slush funds.

The Seoul Central District Prosecutors' Office began its probe into KAI last month over allegations that some of its top officials manipulated expenses for development projects, including the making of a utility helicopter known as the Surion, to gain illicit profits.

T-50/FA-50 Golden Eagle Trainer/Fighter Aircraft
Now the prosecutors suspect that KAI also overstated the value of proceeds from the sale of a light attack aircraft, FA-50, to Iraq, a deal worth some 3 trillion won (US$2.67 billion), according to prosecutors.

The defense company clinched a deal to supply 24 of the aircraft to the Middle East nation in 2013. The prosecution believes that KAI cooked the books as if it had collected the payment from the Iraqi buyers, when the money was in fact not received due to the geographical tension in the Gulf at that time.

Read the full story at YonhapNews