[Kyunghyang, Feb. 26] Reservists Hired by Defense Contractors Receive Huge Salaries for Handing over Purchase Plans

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http://english.khan.co.kr/khan_art_view.html?artid=201302271411267&code=710100

Reservists Hired by Defense Contractors Receive Huge Salaries for Handing over Purchase Plans

By Hong Jin-su

As news surfaced that defense minister nominee Kim Byung-kwan once earned a huge salary working as an adviser for an arms broker, the preferential treatment for retired military officers has come under criticism. Kim received 215 million won from the arms broker for a period of less than two years, from July 2010 until May 2012. 

There had been some cases in which former field officers or generals joined defense contractors, but joining an arms brokerage for such a high salary was rare. Some speculate Kim probably did more than play the role of an adviser, triggering a heated debate on morality.

Currently, there are 721 arms brokers registered at the Defense Acquisition Program Administration (DAPA), which oversees all military arms-related projects, and 96 designated defense contractors. DAPA estimates more than 500 arms brokerages to be in business without a formal registration. However, the military has no accurate count of how many former military officers work as employees, advisers, and consultants in these firms. 

Defense minister nominee Kim Byung-kwan listens to a statement by president-elect Park Geun-hye, who visited the ROK-US Combined Forces Command in Yongsan, Seoul on the morning of February 22. Yonhap News

A DAPA official said, “There are large companies, but there are also many companies which are run by 1~2 people. Some companies don’t even register their business, so it’s virtually impossible to identify who works where.” Some are known to work in secret.

Usually, reservists who previously held senior positions such as generals or higher ranks work on the board of well-known large defense contractors. Currently, Lockheed Martin, Boeing, and European Aeronautic Defence and Space Company (EADS), which are competing for South Korea’s fighter experimental (F-X) program, are known to have recruited former Air Force generals.

Defense contractors need these reserve officers because of their expertise and network. The military and DAPA proceed with their programs under tight security due to the unique nature of arms-related projects. So it is difficult for civilians unfamiliar with the terminology to access sensitive and advanced information. 

Furthermore, the people in charge of the military and DAPA-related projects are mostly old acquaintances from the military, so unless you’re a reservist, it’s difficult to even approach the people handling arms programs.

A military official said, “Although I’m not comfortable, it’s not easy to refuse an invitation to dinner from one’s former superior officer.” This is exactly the “preferential treatment for former officers,” which defense contractors aim for when recruiting former military officers.

Since the military proceeds with its arms purchase plans under tight security, defense contractors can enjoy a competitive edge by just obtaining information on the military’s “plans” to introduce new weapons. However, that’s not all. The next stage is where they need to embark on an all-out “lobby.” 

That’s because if they can influence the military’s required operational capabilities (ROC) and scores, the program will be virtually in their hands. A military official said, “When you attend a weapons-related exhibition, you meet many former ‘senior’ officers who approach those on active duty with their name cards. Their goal is obvious.”

Of course, there are rules which regulate these activities. The Public Servant’s Ethics restrict the employment of reservist generals in related companies. However, related persons say it is difficult to block reservists from working for arms brokerages since the arms brokerage market is growing again.

According to DAPA’s “Yearly Status of the Utilization of Trade Brokerages,” arms brokers intervened in 81% of the commercial purchases (purchases made directly from the vendor without going through the concerned government) made last year. 

After the “Guidelines on Engaging Arms Brokerages,” which recommended the elimination of brokers for private contracts costing more than $2 million, was established in April 2010, the intervention of brokers dropped to 9%, but recovered to 41% in 2011. 

This has given rise to opinions that the military should increase the percentage of foreign military sales (FMS), where unlike commercial purchases there is no room for arms brokers to intervene since the concerned government comes to the negotiation table.

A DAPA official said, “Even as irregularities surrounding the purchase of weapons are exposed, employment in defense contractors continues. There is no other choice but to strengthen regulations within a scope which does not violate the freedom of career choice.”