S. Korea aims to cut out middlemen in arms deals

(ATTN: RECASTS header; specifies date in lead; UPDATES with official's comments in
paras 3-5, 8-9)
By Shin Hae-in
SEOUL, Jan. 14 (Yonhap) -- Corporate agents will be banned from taking more than
five percent in commission from weapons sales beginning this year, South Korea's
weapons procurement agency said Thursday, as part of the country's goal to
increase direct government purchases of defense equipment.
The plan comes after President Lee Myung-bak called September last year on the
country's defense ministry to push to reduce transaction costs generated when
arms dealers are involved.
"In the long run, what we want is to completely root out the intervention of
corporate intermediaries in arms sales," Byun Moo-keun, head of Seoul's Defense
Acquisition Program Administration (DAPA), said in a press briefing Thursday.
"If a foreign weapons producer is persistent in trading through corporate agents,
we plan to specify the amount of commissions they can receive and oblige them to
disclose the amount," the weapons agency chief added. "This would also help in
reducing corruption and increasing transparency in arms dealings."
President Lee, in September, was quoted as saying the country could reduce its
defense budget by up to 20 percent if it manages to cut off transaction costs, or
dealer rebates, in weapons transactions.
About 560 weapons sales intermediaries are working in South Korea to promote
weapons produced by their employers and about 65 percent of weapons purchases are
made through them, according to recent government data.
South Korea is one of the largest arms buyers in the world, purchasing US$800
million worth of U.S. arms on a foreign military sales basis in 2008, according
to the most recent data by the U.S. Congressional Research Service.
The state-run weapons agency also plans to set up stronger measures to prevent
retired DAPA officials from leaking confidential data, Byun added, recalling past
incidents of information leakage "with great regret."
"We will work on enhancing the integrity of incumbent officials through stronger
disciplinary measures," he said. "We are discussing how to also successfully
control retiring or discharged soldiers and officials."
hayney@yna.co.kr
(END)