Two employees of a South Korean construction firm have been indicted on U.S. federal fraud charges in connection with construction contracts for projects at a U.S. Army base in South Korea, the Dept. of Justice says.
The indictment was handed up by a federal grand jury on Nov. 8 in U.S. District Court for the Western District of Tennessee, DOJ says.
The indictment charges two employees of SK Engineering & Construction Co. Ltd.—South Korean citizens Hyeong-won Lee and Dong-Guel Lee—with submitting fraudulent subcontracts that allegedly hid bribes and kickbacks to a former U.S. Army Corps of Engineers official.
Both defendants, who are not related, were charged with one count of conspiracy to defraud the U.S., wire fraud and obstruction of justice as well as one count of major fraud against the U.S.
In addition, Hyeong-won Lee, 58, was charged with two counts of wire fraud and one count of money-laundering conspiracy.
Dong-Guel Lee, 48, was charged with one count of witness tampering.
DOJ noted that the charges are only allegations.
The Nov. 8 action follows a separate indictment issued in September 2017 against the former Corps of Engineers officer, Duane Nishiie, and another South Korean citizen—Seung-Ju Lee, whom the 2017 indictment identifies as a former officer in the South Korean Ministry of Defense’s procurement operation.
From 2006 to 2012, Nishiie was a contracting officer with the Corps Far East District. He then worked as a consultant for SK E&C from 2012 to 2014, the new indictment says.
According to the new indictment, the two SK employees and then-Corps contract official Nishiie allegedly engaged in a plan to steer contracts to SK.
Brian A. Benczkowski, assistant attorney general in charge of DOJ’s criminal division, said in a statement that the two defendants “allegedly submitted fraudulent construction subcontracts to disguise millions in kickback payments to a public official and then tried to cover their tracks.”
SK E&C was not indicted. It ranked No. 57 on ENR’s 2018 list of Top Global Contractors, reporting slightly more than $2 billion in international revenue for 2017. The company also reported total 2017 revenue of $5.9 billion.
The contracts were part of a DOD-South Korean government plan to expand Camp Humphreys, a large base near Pyongtaek, about 50 miles south of Seoul.
According to the new indictment, starting in about 2008 and extending through about 2014, SK E&C sought contracts for the Camp Humphreys project.
Camp Humphreys contract
In 2008, the indictment says, the Corps’ Far East District sought bidders for a land development, utilities and infrastructure project on one part of the camp.
Nishiie was in charge of evaluating the bids for the contract, which was valued at about $400 million, the indictment says. Several large South Korean companies bid on the job, including SK E&C.
The new indictment also says that SK E&C, through Hyeong-Won Lee and other people, “agreed to pay Nishiie money, and other things of value, as bribes and kickbacks, in exchange for Nishiie influencing the [land development-utilities-infrastructure] contract award process on behalf of SK E&C.”
In September 2008, Nishiie pared the list of eligible bidders from 12 to a short list of five, including SK E&C. Three months later, he recommended awarding the contract to that firm.
The indictment also cites a second Corps contract, valued at $6 million, to build a project management office at Camp Humphreys. It says Nishiie “took steps to influence” the award process and help SK E&C to win it.
In another action, the indictment alleges that Seung-Ju Lee and other individuals set up S&Teoul, a construction company that “served as a means to launder bribes and kickbacks” from SK E&C to Nishiie. Seung-Ju Lee was president of S&Teoul.
The indictment also says that. at Hyeong-Won Lee’s instruction, SK E&C awarded two subcontracts, valued at more than $3 million, to S&Teoul for work related to the Camp Humphreys expansion.
But it says that S&Teoul didn’t perform any of the work specified in the subcontract. Instead, the work was done by SK E&C and other subcontractors.
In a Sept. 26, 2017, press release, DOJ said that the bribes totaled more than $3 million.
According to a September 2017 Associated Press story, at the time of the indictment Nishiie was detained at the federal detention center in Hawaii. It also said that he pleaded not guilty to the charges.
The only Federal Detention Center listed for Hawaii is in Honolulu.
A search of the Federal Bureau of Prisons database shows that Nishiie was released on Sept. 27, 2017.
A Justice Dept. spokesperson said via email on Nov. 9 that Nishiie remains on release in Hawaii and is awaiting trial, which is slated to begin next March 27 in Hawaii.
The spokesperson also said, “To the best of our knowledge, Seung-Ju Lee is on trial in the Republic of Korea and has not appeared in the United States on U.S. charges.”
The DOJ spokesperson said that Hyeong-won Lee and Dong-Guel Lee “remain employees at SK as far as we know.”
ENR was unable to identify attorneys for any of the defendants.
Nishiie isn’t listed in the Honolulu-area residential telephone directory.