Three more South Korean firms rigged U.S. military bids - sources

Hanjin Logistics

21/11/2018 18:31

By Diane Bartz
    WASHINGTON, Nov 21 (Reuters) - South Korea's S-Oil Corp
 010950.KS , Hyundai Oilbank Co  INPTVH.UL  and Jier Shin Korea
Co took part in a bid-rigging scheme that led to more than $100
million in overcharges to the U.S. military, according to two
sources with knowledge of the matter.
    The three companies were not named in filings in U.S.
federal court in Ohio that described a conspiracy that involved
a total of six companies that overcharged U.S. military bases in
South Korea for fuel.
    The South Korea bid-rigging investigation is part of a more
aggressive effort by the U.S. Justice Department to crack down
on companies that defraud the U.S. government on military
contracts.
    The court papers filed by U.S. Justice Department after it
settled with three other companies last month named SK Energy Co
Ltd SKENGG.UL ; GS Caltex Corp  GSCAL.UL , 50 percent owned by
Chevron  CVX.N ; and Hanjin Transportation Co Ltd  002320.KS .
They agreed to pay a total of $236 million in criminal fines and
civil damages.  urn:newsml:reuters.com:*:nL2N1XP1HY
    The Justice Department estimated that the bid rigging
occurred from about 2005 to 2016. The government procurement
data site GovTribe said that between 2008 and 2013 the major
sellers of fuel to U.S. military bases in South Korea were
S-Oil, GS Caltex, SK Energy, Hanjin, Hyundai Oilbank and Jier
Shin Korea.   
    S-Oil Corp said through a spokesperson that it was "unaware
of any investigation." S-Oil is partially owned by Aramco
Overseas, according to both Aramco's and S-Oil's web sites.
    A spokesperson for Hyundai Oilbank acknowledged that it was
under investigation but declined further comment. A Jier Shin
Korea spokesperson also was "unaware of such investigation."
    Court filings which accompanied the Justice Department
settlement with SK Energy, GS Caltex and Hanjin this month
referred to other companies involved in the probe as Company A
and Company C, both oil companies, and Company B, a logistics
firm.
    The sources, who were not authorized to speak on the record,
identified S-Oil and Hyundai as the oil companies and Jier Shin
as the logistics company.
    The U.S. military had a budget of about $700 billion in the
2018 fiscal year, which ended on September 30.  urn:newsml:reuters.com:*:nL2N1XQ1CT
    A large proportion of the budget is spent in South Korea
where the United States has kept a military presence in the
divided peninsula since the 1950-1953 war. There are currently
more than 28,000 troops in South Korea. Camp Humphreys south of
Seoul is the largest U.S. overseas base with nearly 20,000 U.S.
personnel.
    Following the settlement announced last week, Makan
Delrahim, head of the U.S. Justice Department's antitrust
division, said that the department planned to be more aggressive
in pressing antitrust charges against companies that rigged bids
for contracts to supply the government.  urn:newsml:reuters.com:*:nL2N1XQ1FZ
    In addition to scrutinizing mergers to make sure they comply
with antitrust law, the Justice Department investigates and
charges companies that are supposed to compete but who conspire
to raise prices.  
    The bid-rigging came to light because of a whistleblower,
according to a lawyer for the whistleblower, Eric Havian of
Constantine Cannon.

 (Reporting by Diane Bartz; Additional reporting by Joori Roh in
Seoul and Idrees Ali in Washington; Editing by Chris Sanders and
Clive McKeef)
 ((Diane.Bartz@thomsonreuters.com; 1 202 898 8313;))