Industry committee members from both parties speak in unison; Trade Minister Kim Jung-kwan pledges 'balanced' review

Committee chair warns ministry not to simply follow sub-cabinet agency's recommendation

The exterior of LIG D&A's Pangyo House. [LIG D&A]
The exterior of LIG D&A's Pangyo House. [LIG D&A]

Lawmakers from both the ruling and opposition parties raised objections Friday to the Defense Acquisition Program Administration's request that the Ministry of Trade, Industry and Energy review revoking LIG D&A's designation as a defense contractor, calling the move excessive. Trade Minister Kim Jung-kwan said the ministry would make a "balanced judgment" on the matter.

People Power Party lawmaker Ku Ja-geun asked Kim at a plenary session of the National Assembly's Trade, Industry, Energy, SMEs and Startups Committee whether the ministry had received a request to review revoking LIG D&A's defense contractor status. Kim confirmed it had.

Ku said DAPA had already imposed a two-year ban on LIG D&A's bidding eligibility over allegations of bribery and cost fraud, and called it "unusual" for the agency to go further and seek revocation of the company's defense contractor designation on top of that. "Defense contractor status is not something built overnight," Ku said, questioning whether it was right to "strip away accumulated know-how in one stroke and impose sanctions on national competitiveness."

Ku also cited past administrative penalty cases. He noted that in 2024, Hanwha Systems' bidding ban was replaced with a fine, and that HD Hyundai Heavy Industries, though referred for a bidding-restriction review over a military secrets leak the same year, retained its eligibility and received only administrative guidance. He also pointed to Korea Aerospace Industries' six-month bidding ban in 2022 being lifted on Liberation Day that year.

"Illegal conduct must of course be dealt with strictly, and I have no intention of defending it," Ku said, "but this goes beyond one company's problem — it affects national defense and industrial competitiveness."

Kim said he agreed with most of Ku's points and pledged to weigh "the severity of the matter, consistency with past cases, and the unique circumstances of South Korea's defense industry" in reaching a balanced decision.

Democratic Party of Korea lawmaker Lee Eon-ju was more pointed in her criticism. "This is unthinkable," she said, arguing that an illegal act is an individual offense, while a defense contractor designation covers the entirety of a company's accumulated work — making the two categorically different. "To talk about revoking the designation on these grounds is absurd," she said. "It is not worth a moment's consideration."

Kim told Lee that the ministry was obligated to review the request now that it had been received.

Committee Chair Kim Sung-won of the People Power Party also urged the minister to scrutinize the sub-cabinet agency's recommendation more carefully rather than simply follow it. "I hope we do not make the mistake of letting an individual's misconduct shake the entire national defense industry," Kim Sung-won said.

DAPA asked the Trade Ministry in September to consider revoking LIG D&A's defense contractor designation in connection with a small unmanned aerial vehicle countermeasure project. The authority to grant or revoke such designations rests with the trade minister.

DAPA cited Article 48, Paragraph 1, Subparagraph 1 of the Defense Acquisition Program Act, which governs violations of integrity pledges, as the basis for its request. The two-year bidding ban blocks only new bids. If the designation is revoked, LIG D&A would also be barred from entering into a sole-source contract for the mass production phase of the small drone countermeasure project.

DAPA had earlier voted on Oct. 20 to impose the two-year bidding ban on LIG D&A over allegations of bribery and cost fraud.

LIG D&A subsequently filed for a stay of execution and a lawsuit to cancel the disposition. A court granted a temporary stay, suspending the sanctions through Nov. 20, and deferred its ruling at a formal hearing Wednesday.


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