Hanwha Ocean sues rival HD HHI over KDDX design leak

Hanwha Ocean, a South Korean shipbuilding tycoon, held a press conference to shed light on its lawsuit against HD Hyundai Heavy Industries (HD HHI), accusing the latter of violating the Military Secret Protection Act. Hanwha Ocean claimed that the company has clear evidence of HD HHI executives’ involvement in the leak of the conceptual design report for the Korean Next-Generation Destroyer (KDDX), resulting in employees of HD HHI being found guilty, The Chosun Daily reported.

Hanwha Ocean announced this at the press conference held on Mar. 5. at the Hanwha Building in Euljiro, Jung-gu, Seoul. Koo Seung-mo, a lawyer from Hanwha Ocean’s Compliance Office, served as a conference speaker, and Jung Won, a lawyer from Yulchon LLC, and Bae Sun-tae, the senior manager of Hanwha Ocean’s special ship sales division, attended the event.

The shipbuilding tycoon revealed evidence to prove that HD HHI’s executives were involved in the case. According to the company, the counterparty’s employees admitted that they viewed and photographed secret military documents with the approval of their superiors in interrogations conducted between 2018 and 2020.

Hanwha Ocean also said that, in a 2019 investigation, an employee from HD HHI answered “yes” when asked if his superiors were aware that they viewed and filmed classified military documents for reference in the preliminary study on the third KSS-III Batch-II submarine, “Jangbogo.” However, it was not an incident of organized cheating, according to his statement at the time.

Hanwha Ocean argued that it would be difficult to steal military secrets on multiple occasions over several years without the explicit or implicit instructions or involvement of HD HHI’s senior executives, adding that their stealing process, including building, operating, and managing an internal secret server and even creating a response manual to evade investigations shows itself to be an organized crime.

Koo Seung-mo, a lawyer representing Hanwha Ocean, said, “If the business continues without taking corresponding measures against corporate crime, similar cases will be repeated, impartiality will be lost, and the leakage of national secrets poses a grave risk to national security.”

Employees from HD HHI were convicted in November last year of violating the Military Secret Protection Act by secretly acquiring confidential military information related to the KDDX project and sharing it through the company’s internal network.

Last month, the Defense Acquisition Program Administration (DAPA) decided to impose “administrative guidance” on HD HHI as an anti-corrupt sanction at a contract review council meeting held on Feb. 27. HD HHI had already received a cut in security score (-1.8 points) in its bid for the DAPA. If the bid restriction sanctions were imposed, the shipbuilding giant would not be able to participate in naval ship projects for a certain period, intensifying the war between the two companies.

HD HHI said on the same day that “The allegations are nothing more than false claims that are difficult to understand, and the matter has already been concluded through the court’s ruling and two rounds of in-depth deliberations by the DAPA,” adding, “The company will solely focus on strengthening its K-defense capabilities through technology development and export expansion.”